THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND NEED YOUR IMMEDIATE

ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own financial
advice immediately from an independent financial adviser, who is authorised under the Financial Services and Markets
Act 2000 ("FSMA") if you are in the United Kingdom, or from another appropriately authorised independent financial
adviser if you are in a territory outside the United Kingdom.

This document comprises a prospectus relating to Monzo Bank Limited ("Monzo") and has been prepared in accordance with
the Prospectus Rules of the Financial Conduct Authority (the "FCA") made pursuant to section 84 of FSMA and has been filed
with the FCA in accordance with Rule 3.2 of the Prospectus Rules. This document will be made available to the public in
accordance with Rule 3.2 of the Prospectus Rules at www.monzo.com/invest. No application is being made or is currently
intended to be made for the E Ordinary Shares to be admitted to listing or dealt with on any other exchange.

You should read the entire document and any information incorporated herein by reference and, in particular, the section
headed "Risk Factors" on pages 12 to 24 of this document when considering an investment in the E Ordinary Shares. All
statements regarding Monzo's business, financial position and prospects should be viewed in light of such Risk Factors.

Monzo, the Directors and the Proposed Director, whose names appear on page 34, accept responsibility for the information
contained in this document. To the best of the knowledge and belief of Monzo, the Directors and the Proposed Director (each of
whom has taken all reasonable care to make sure that such is the case), the information contained in this document is in
accordance with the facts and contains no omission likely to affect the import of such information.

Monzo Bank Limited

(incorporated and registered in England and Wales with registered number 09446231)

Prospectus
Offer of up to 2,592,520 new E Ordinary Shares

No person has been authorised to give any information or make any representations other than those contained in this
document and any such information or representations must not be relied upon as having been so authorised by Monzo or any
other person. Monzo will comply with its obligation to publish supplementary prospectuses containing further updated
information needed by law or by any regulatory authority but assumes no further obligation to publish additional information.

Subject to FSMA, the Prospectus Rules and applicable laws, the delivery of this document shall not, under any circumstances,
create any implication that there has been no change in the affairs of the Group since the date of this document or that the
information in this document is correct as at any time after this date.

This document should not be distributed, forwarded to or transmitted in, into or from any territory outside of the United Kingdom.
Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction.

The contents of this document and the information incorporated herein by reference should not be construed as legal, business
or tax advice. Each prospective investor should consult a legal adviser, financial adviser authorised under FSMA or tax adviser
for advice if they have any concerns or questions about the contents of this document or the subscription for the E Ordinary
Shares before making their decision to invest. Neither Monzo nor any of its respective Directors, Proposed Director, employees
or representatives is making any representation to any offeree or purchaser or acquirer of the E Ordinary Shares regarding the
legality of an investment in the E Ordinary Shares by such offeree or purchaser or acquirer under the laws applicable to such
offeree or purchaser or acquirer.

26 November 2018
 CONTENTS

Clause Page

SUMMARY 2
SECTION A: INTRODUCTIONS AND WARNINGS 2
SECTION B: ISSUER AND ANY GUARANTOR 2
SECTION C: SECURITIES 6
SECTION D: RISKS 8
SECTION E: OFFER 9
RISK FACTORS 12
IMPORTANT INFORMATION 25
THE OFFER 27
EXPECTED TIMETABLE OF PRINCIPAL EVENTS 33
DIRECTORS, PROPOSED DIRECTOR, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS 34
PART I INFORMATION ON THE GROUP 35
PART II REGULATION 46
PART III CAPITAL RESOURCES AND OPERATING AND FINANCIAL REVIEW OF THE GROUP 52
Part A: Capital Resources 52
Part B: Operating and Financial Review 53
PART IV FINANCIAL INFORMATION OF MONZO 56
PART V DIRECTORS, PROPOSED DIRECTOR, SENIOR MANAGEMENT, CORPORATE GOVERNANCE,
AND EMPLOYEES 71
PART VI TAXATION 83
PART VII ADDITIONAL INFORMATION 86
PART VIII DEFINITIONS 109
APPENDIX 119
FY2017 annual report 119
FY2018 annual report 154
 -2-

SUMMARY

Summaries are made up of disclosure requirements known as "Elements". These Elements are
numbered in Sections A-E (A.1-E.7).

This summary contains all the Elements needed to be included in a summary for this type of
security and issuer. Because some Elements are not required to be addressed there may be
gaps in the numbering sequence of the Elements.

Even though an Element may be needed to be inserted into the summary because of the type of
security and issuer, it is possible that no relevant information can be given regarding the Element.
In this case a short description of the Element is included in the summary with the mention of
"not applicable".

SECTION A: INTRODUCTIONS AND WARNINGS

A.1 Introduction and Warning

This summary should be read as an introduction to this document.

Any decision to invest in the securities should be based on consideration of this document
as a whole by the investor.

Where a claim relating to the information contained in this Prospectus is brought before a
court, the plaintiff investor might, under the national legislation of a member state of the
European Union, have to bear the costs of translating this document before the legal
proceedings are initiated.

Civil liability attaches only to those persons who have tabled the summary, including any
translation thereof, but only if the summary is misleading, inaccurate or inconsistent when
read together with the other parts of this document or it does not provide, when read
together with the other parts of this document, key information to aid investors when
considering whether to invest in such securities.

A.2 Subsequent resale of securities or final placement of securities through financial

intermediaries

Not applicable; no consent has been given by Monzo or any person responsible for drawing
up this document to use this document for any subsequent resale or final placement of
securities by financial intermediaries.

SECTION B: ISSUER AND ANY GUARANTOR

B.1 Legal and commercial name

Monzo Bank Limited

B.2 Domicile, legal form, legislation, country of incorporation

Monzo is a private limited company, incorporated in England and Wales on 18 February

2015 under the Act, with its registered office situated in England and Wales.

B.3 Current operations and principal activities and markets

Monzo is a digital challenger bank whose principal activity is to provide retail banking
services in the UK. Monzo's products include current accounts, overdrafts, fixed term loans,
saving pots, and partnerships with third parties. Monzo has over 1,000,000 customers who
have activated their current accounts. Monzo aims for its product to be simple and easy to
use, with excellent customer service and innovative features to help customers to
 -3-

understand and manage their money. Monzo's long term vision is to give customers the
ability to view and control a range of financial and non-financial services from within the
Monzo App.

B.4a Significant recent trends affecting Monzo and its industry

The challenger bank sector is thriving having seen continued rapid growth in the wake of
increased openness, as well as customer desire for tailored, cheaper and more modern
banking services. Returns on individual customers continue to improve and the Group is
keeping high levels of cash at central banks to protect depositors (the CET1 ratio has
increased up to 110% in FY18, from 17.4% in FY16). Emerging rules relating to capital in
this area, including for example Basel IV, will continue to shape challenger bank appetites
for different products and services, as well as defining their drive for scale and stronger
balance sheets.

Monzo has raised a total of £85 million since the end of its last financial year and a total of
approximately £180 million since it began operating in 2015. £85 million of which was as a
result of its Series E Investment Round in October 2018 from existing and new investors
including General Catalyst and Accel. The Series E Investment Round valued Monzo at £1
billion.

Monzo launched current accounts in July 2017 with nearly 95% of prepaid Active Customers
migrated to the new current accounts in 2018. The prepaid scheme incurred marginal losses
of around £65 per Active Customer per year (the marginal amount of money lost per Active
Customer). Primarily by moving from the prepaid debit cards to the current accounts
powered by Monzo's own technology, Monzo's unit economics (the marginal amount of
money earned or lost per customer) improved dramatically with Monzo currently
Contribution Margin positive. The improvement in unit economics between the prepaid and
current account is reflective of both an increase in revenue from new product features and
cost savings realised by Monzo. Monzo now wishes to complete the journey to profitability
at the company level.

B.5 Description of the Group

Monzo has one subsidiary: Monzo Support US Inc. ("Monzo Support US"), a Delaware
corporation, which was incorporated under the laws of Delaware in the United States on 18
September 2018. Once it becomes fully operational, it is intended that Monzo Support US
will provide overnight customer support services to UK customers.

Monzo has no joint ventures, or associates.

B.6 Notifiable interests, different voting rights and controlling interests

As at the Latest Practicable Date, the interests of the Directors, Proposed Director and
persons connected to them as notified to Monzo in accordance with the Articles are as
follows1:
Director/ Proposed Director Total number of % of issued share Options
Shares capital

Tom Blomfield 9,174,911 7.77% N/A

Gary Dolman 1,006,388 0.85% N/A

Amy Kirk 37,592 0.03% N/A

Tim Brooke 130,745 0.11% N/A

1
For the purpose of this table, figures assume that all transfers of Ordinary Shares and their re-designation as E Ordinary Shares in
connection with the Series E Investment Round have completed (completion is pending receipt of stamped stock transfer forms from
HMRC).
 -4-

Keith Woollard 80,451 0.07% N/A

Eileen Burbidge (Passion 0a 0%b N/A

Capital)
Miles Grimshaw (Thrive) 0c 0%d N/A

Alwyn Jones (Proposed 0 0% CSOP: 12,765

Director) Unapproved Plan:
197,235
a
Eileen Burbidge is an Investor Director, representing Passion Capital, which holds 37,824,021 Shares.
b
Passion Capital has a 32.02 % direct interest in Monzo's issued share capital.
c
Miles Grimshaw is an Investor Director, representing Thrive, which holds 16,855,303 Shares.
d
Thrive has a 14.27% direct interest in Monzo's issued share capital and is indirectly interested in a further 0.15% of Monzo's
Shares through its shareholdings in another Monzo shareholder.

As at the Latest Practicable Date, in addition to those persons described above, Monzo had
been notified of the following persons who are directly or indirectly interested in 3 per cent.
or more of the issued share capital of Monzo2:
Person Number Number Number Number Number Number Number % of
of of A1 of A2 of B of C of D of E issued
Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary share
Shares Shares Shares Shares Shares Shares Shares capital
Passion 10,016,600 9,740,892 6,203,955 4,971,167 5,028,681 1,862,726 32.02%
Capital

Thrive 12,925,035 2,634,008 1,296,260 14.27%a

General 4,545,984 3.85%b

Catalyst
Stripe 10,532,122 905,417 9.68%

Paul 6,792,562 5.75%

Rippon
Goodwater 4,832,089 448,506 4.47%
Capital

The 5,092,081 4.31%

Crankstart
Foundation

Crowdcube 1,935,718 2,381,351 372,608 3.97%

Nominees
Limited as
nominee
for the
Crowdcube
Investors

Accel 4,446,172 3.76%

a
Thrive is indirectly interested in a further 0.15% of Monzo's Shares through its shareholdings in another Monzo
shareholder.
b
General Catalyst is indirectly interested in a further 0.79% of Monzo's Shares through its shareholdings in another
Monzo shareholder.

The Shares held by the Shareholders set out above all have the same voting rights per
security.

As at the Latest Practicable Date (prior to the publication of this document), Monzo was not
aware of any person or persons who, directly or indirectly, jointly or severally, exercise or
could exercise control over Monzo.

B.7 Selected historical key financial information

Monzo has published audited annual accounts for the years ended 28 February 2017 and
28 February 2018 prepared in accordance with International Financial Reporting Standards

2
For the purpose of this table, figures assume that all transfers of Ordinary Shares and their re-designation as E Ordinary Shares in
connection with the Series E Investment Round have completed (completion is pending receipt of stamped stock transfer forms from
HMRC).
 -5-

("IFRS") as adopted by the EU.

Copies of the annual reports can be found in the Appendix and are also available on its
website, here:

1) FY2017 annual report: https://monzo.com/annual-report/2017/

2) FY2018 annual report: https://monzo.com/annual-report/2018/

Certain key historical information of Monzo is set out in the table below:

Audited Year end to 28 Audited Year end to 28

February 2018 February 2017

Income Statement

£ ‘000 £ ‘000

Net Operating Income 1,814 120

Operating Expenses (34,890) (8,047)

Losses before Tax (33,076) (7,927)

Losses after Tax (30,546) (6,689)

Balance Sheet

Cash and Cash Equivalents 96,943 14,874

Non-cash assets 42,877 4,604

Customer deposits 71,276 n/a

Other Liabilities 12,365 1,080

Net Assets 56,179 18,398

Cash Flows

Net cash flow/ (outflow) from 15,557 (9,532)

operating activities

Net cash outflow used in (886) (230)

investing activities

Net cash flow from financing 67,398 24,225

activities

Net increase / (decrease) in 82,069 14,463

cash and cash equivalents

Cash and cash equivalents at 96,943 14,874

end of year

Monzo’s net operating income has risen from £120,000 in the year ended 28 February 2017
to £1,814,000 in the year ended 28 February 2018. Net Losses after Tax increased from
(£6,689,000) in the year ended 28 February 2017 to (£30,546,000) in the year ended 28
February 2018. Customer deposits increased from £0 in the year ended 28 February 2017
to £71,276,000 in the year ended 28 February 2018.

The key driver behind these numbers is the rapid customer growth during financial year
 -6-

2018 on Monzo’s former prepaid card program, and the subsequent migration of customers
to current accounts in the latter half of financial year 2018. During financial year 2018, the
customer base almost quadrupled, reaching 590,000 customers.

During financial year 2018, Monzo also raised a net total of £67.4 million through equity
raises, including a mix of institutional and crowdfund investors. These funds were used to
invest in ongoing business operations, including supporting the increased customer base,
and maintaining a surplus capital balance above regulatory capital balance requirements.

In October 2018, Monzo raised a further total of £85 million through an institutional
fundraise.

In September 2018, Monzo established a US operational subsidiary, incorporated in

Delaware and based in Nevada, to support its 24/7 customer operations.

Save as set out above, there has been no significant change in the trading or financial
position of the Group since 28 February 2018, the end of the last financial period of Monzo
for which financial information was prepared.

B.8 Selected key pro forma financial information

Not applicable; no pro forma financial information is contained in this document.

B.9 Profit forecast or profit estimate

Not applicable; Monzo has not made a profit forecast or estimate.

B.10 Audit report on the historical financial information – qualifications

Not applicable; no qualifications are included in any report on Monzo’s historical financial
information contained in this document.

B.11 Sufficient working capital

Not applicable; Monzo is of the opinion that the working capital available to the Group is
sufficient for its present requirements, that is, for at least 12 months following the date of
publication of this document.

SECTION C: SECURITIES

C.1 Type and class of securities

The securities being offered pursuant to the Offer are E Ordinary Shares of £0.0000001
each. The securities are created under the Act.

C.2 Currency of the securities issue

The E Ordinary Shares are priced in GBP.

C.3 Number of issued and fully paid securities and par value

As at the Latest Practicable Date, Monzo had in issue 118,127,693 fully paid Shares of
£0.0000001 each.

C.4 Rights attached to the securities

The E Ordinary Shares will be issued and credited as fully paid and will rank pari passu with
the existing E Ordinary Shares in issue at the time the E Ordinary Shares are delivered.

The E Ordinary Shares issued pursuant to the Offer will be issued to Crowdcube Nominee,
which will hold the legal title to such Shares. Successful Applicants as Crowdcube Investors
 -7-

will hold the beneficial interest in the E Ordinary Shares issued pursuant to the Offer and
Crowdcube Nominee will issue beneficiary statements to each of them.

As Crowdcube Investors, the rights attaching to the E Ordinary Shares held by successful
Applicants will vary from Shareholders who hold both the legal and beneficial rights to
Shares. The Articles provide details of the varying rights, which include certain pre-emption
provisions not applying to Crowdcube Shares issued to the Crowdcube Nominee and
Crowdcube Nominee and Crowdcube Investors not being able to transfer or dispose of any
interest in the Crowdcube Shares or the beneficial interest in the Crowdcube Shares, as
applicable, held by them except with the consent of the Board, pursuant to the Articles or
where otherwise required to do so under the Articles or pursuant to acceptance of an offer
above a pre-set consideration value.

Crowdcube Nominee, as the registered legal title holder of the E Ordinary Shares issued
pursuant to the Offer, will have the right to execute all agreements, take all actions, and
exercise all voting rights as directed by Crowdcube. Each of the Crowdcube Investors will
appoint Crowdcube as its representative in respect of the E Ordinary Shares, under the
terms of a representative agreement.

Crowdcube will direct Crowdcube Nominee in accordance with what Crowdcube deems, in
its absolute discretion, to be in the best interests of the Crowdcube Investors as a whole.
Where Crowdcube determines that a matter in relation to the E Ordinary Shares requires a
decision to be made by Crowdcube Investors, Crowdcube will use reasonable endeavours
to notify Crowdcube Investors and shall action such matter in accordance with the wishes of
the majority of responding Crowdcube Investors (measured by the number of E Ordinary
Shares beneficially held by such responding Crowdcube Investors).

What this means, in practice, is that Crowdcube will take all administrative decisions on
behalf of Crowdcube Investors. If Crowdcube believes that a decision needs to be made
by Crowdcube Investors collectively, then Crowdcube will provide all relevant information
and an explanation and will open a poll to Crowdcube Investors to vote. For example,
if Crowdcube Investors are being asked to vote in favour of an amendment to Monzo's
Articles of Association, Crowdcube would poll the Crowdcube Investors.

Subject to the provisions of the Act and in accordance with the Articles, Monzo may, from
time to time, declare dividends and make other distributions on the E Ordinary Shares.

C.5 Restrictions on transfer

The Board has the authority to refuse to register a transfer in a number of circumstances,
including if such a transfer is to be made to a current or prospective employee or director
who has not entered into a joint s. 431 ITEPA election with Monzo, a party who is a
competitor of the Group or if such a transfer would result in the acquisition or increase in
control of the Group and certain approvals have not been obtained.

The Board may exercise its discretion, in certain circumstances in accordance with the
Articles, to refuse to register transfers of the Crowdcube Shares or transfers to Family
Trusts, as well as requiring any proposed transferee to agree to be bound by the terms of
any shareholders' agreement other than the Crowdcube Nominee or Crowdcube Investors.

A Crowdcube Investor is not entitled to transfer or dispose of any interest in the Crowdcube
Shares held by them except with the consent of the Board, pursuant to the Articles or where
otherwise required to do so under the Articles or pursuant to acceptance of an offer above a
pre-set consideration value.

In the event that a proposed transfer of Shares is to be made to a third party who is not a
Permitted Transferee, the Shares must be offered on a pre-emptive basis as follows:

a) firstly, if the Sale Shares are held by a Founder or a Relevant Shareholder (or a
Permitted Transferee of such Founder or Relevant Shareholder) to either an
 -8-

employee benefit trust established by Monzo and/or to any other existing or new
Monzo employee (in each case subject to the necessary Board and Shareholder
approvals (as the case may be));

b) secondly, to all Relevant Investors; and

c) thirdly, with respect to Shares held by any Shareholder which is not a Relevant
Investor, to all Shareholders (other than the Relevant Investors).

C.6 Application for admission to trading on regulated market

No application is being made for the Shares to be dealt on any stock exchange or
investment exchange.

C.7 Dividend policy

Monzo is not currently paying dividends and does not anticipate being in a position to pay
dividends for several years to come.

SECTION D: RISKS

D.1 Key information on key risks relating to the company or its industry

Risks relating to the Group

• The Group's business is subject to inherent risks arising from macroeconomic

conditions in the UK, the Eurozone and globally, both generally and as they
specifically affect financial institutions.

• The Group is subject to risks arising from the UK's exit from the EU. The regulatory
framework applicable to the Group as a provider of financial services is derived from
EU directives and regulations. Additionally, the Group benefits from certain rights as
a financial institution established in the EU (such as the passporting regime). It is not
clear whether the UK Government and the European Commission will reach a
satisfactory agreement on financial services or whether the regulatory framework will
change.

• The Group has a limited operating history in the UK and faces risks associated with
the implementation of its business strategy, including operational, financial,
macroeconomic, market, pricing and technological challenges.

• The Group's business is dependent on its technology infrastructure, some of which

is reliant on third party providers. There can be no assurance that the Group will not
encounter issues which could result in loss of data, interruptions in service, delays or
cessation in the availability of systems. Any such losses, interruptions, delays or
cessation could make it difficult or impossible for the Group to provide certain
services and could affect the Group's brand and reputation.

• The Group is exposed to risks arising from the potential for data loss (including the
loss of users' personal data). Any such losses could expose the Group to regulatory
fines, civil actions and associated remedial costs, and could also impact on
consumer confidence and the Group's brand and reputation.

• The UK market for financial services is competitive and this presents a number of
risks for the Group. A number of established banks have greater scale and financial
resources than the Group and may be less affected by periods of economic volatility.
The Group also faces competition from other challenger banks, prepaid card
providers and large non-finance companies that have developed banking operations.

• The Group is reliant on the success of its brand, and it is subject to reputational
 -9-

harm that could damage its brand. The Group's brand is relatively new, and there
can be no assurance that the Group will be able to continue to successfully develop
its brand's reach to grow its market share.

• The Group's business is subject to risks relating to the cost and availability of
liquidity and funding. The availability of retail deposits, the Group's primary source of
funding, may be impacted by increased competition from other deposit-takers or
factors that constrain the volume of liquidity in the market.

• As a bank, the Group is subject to regulations that require it to have a certain

amount of money and other assets kept aside to ensure it can pay its bills and
protect savers at all times (i.e. regulatory capital). These requirements have
increased significantly over the last decade, largely in response to the financial
crisis, but also as a result of continuing work undertaken by regulators in the
financial sector. The requirements around this area are likely to increase even
further over the coming years, with the possibility that banks may have to hold
additional regulatory capital.

• The Group is subject to the risk of losses resulting from fraud, misrepresentation or
omission on the part of its customers or by other users of the Group's services.
Although the Group has put in place policies and procedures to reduce the risk of
such fraudulent activity, such measures may not be sufficient in all cases to prevent
accounts being opened, loans being originated, or transactions being processed, on
the basis of fraudulent activity.

• The Group is subject to the risk of unauthorised use of its users' debit cards. Third
parties could get money or underlying goods and services through deception,
including through theft of a user's card or through disclosure of details by an
illegitimate website or merchant. Whilst the Group invests in anti-fraud technology,
high levels of fraud could have a material adverse effect on the Group's reputation,
business, financial condition and results of operations.

D.3 Key information on key risks relating to the securities

• The Shares are not freely transferable and subject to restrictions on transfer.

• There is currently no trading market for the Shares; consequently there is no

certainty of when and how Shareholders will be able to sell Shares.

• The value of the Shares may fluctuate significantly.

• The issue of additional shares in the capital of Monzo may dilute all other
shareholdings.

• Shareholders may earn no return or lose money on their investment in Monzo.

SECTION E: OFFER

E.1 Total net proceeds and estimated total expenses

If Monzo issues all of the E Ordinary Shares available under the Offer, it will raise gross
proceeds of approximately £20 million. The total costs, charges, and expenses payable by
Monzo in connection with the Offer are estimated to be £800,000. Therefore the net
proceeds will be £19.2 million.

E.2a Reasons for the Offer, use of, estimated net amount of the proceeds

The proceeds will be primarily used by the Group to support business growth through
investment in product research and development, marketing and customer growth
initiatives, financing corporate development projects and expanding its operations team
 - 10 -

geographically. Any remaining surplus funds will contribute to Monzo holding surplus capital
relative to its regulatory requirements. An estimated breakdown of funds usage is provided
below, in order of priority:

Business Area Estimated use of funding

Marketplace research and development £5 million

Other product research and development £7 million

Marketing and Customer Growth £5.2 million

Corporate Development projects £2 million

Expenses incurred for the Offer £0.8 million

Total £20 million

Monzo has primarily opted to raise funds by way of crowdfunding to let Eligible Monzo
Customers own part of its business and give them a greater share of ownership. Monzo
could have raised up to £20 million from venture capital firms, but wanted to give Eligible
Monzo Customers a chance to invest.

E.3 Terms and conditions of the Offer

The Offer comprises 2,592,520 E Ordinary Shares at a price of £7.7145 each to Eligible
Monzo Customers. If those customers do not acquire all of the E Ordinary Shares being
offered, Monzo will offer the remaining E Ordinary Shares to the Series E Investors on a pari
passu and pro rata basis. The Offer is not conditional on a minimum fundraising target.

The Offer will only be open to Eligible Monzo Customers, which means individuals who, as
at the date of this document:

(a) have been approved as customers by Monzo having completed the new
customer application process via the Monzo App, including, for the
avoidance of doubt, Monzo customers who have not yet activated their debit
card;

(b) are 18 years old or older; and

(c) are resident in the United Kingdom.

Applicants must complete and submit an application to invest and subscribe for E Ordinary
Shares ("Application") through the Monzo App.

The Offer will comprise of two phases, with Eligible Monzo Customers who are already
Existing Crowdcube Investors being given priority.

All Applicants must agree to buy at least 1 E Ordinary Share.

Eligible Monzo Customers who are Existing Crowdcube Investors and apply in Phase 1 will
be able to buy E Ordinary Shares up to a maximum value of £2,000. Phase 1 does not
operate on a first come first serve basis; there is a sufficient number of E Ordinary Shares
for all Eligible Monzo Customers who are Existing Crowdcube Investors to take up to the
maximum number of shares available.

Eligible Monzo Customers (including Eligible Monzo Customers who are Existing
 - 11 -

Crowdcube Investors who do not apply in Phase I) who apply in Phase 2 will be able to buy
E Ordinary Shares on a first come first served basis up to a maximum value of £2,000.

Applicants cannot submit more than one Application.

Applicants must have enough money in their Monzo account at the time of Application
to pay for any E Ordinary Shares that they seek to buy. Applicants are able to use their
overdraft for this payment – any such overdraft will be subject to the usual overdraft charges
(as described in paragraph 4.3 of Part I).
E.4 Material interests

Not applicable; there are no interests that are material to the Offer.

E.5 Selling shareholders

Not applicable; no person is selling Shares in Monzo as part of the Offer.

E.6 Dilution

Up to 2,592,520 E Ordinary Shares will be issued as part of the Offer. If the maximum
2,592,520 E Ordinary Shares are issued, Eligible Monzo Customers who participate in the
Offer will hold approximately an aggregate 2.15% of the total Shares in issue if the Offer is
fully subscribed. If none of the Existing Shareholders participate in the Offer and the Offer is
fully subscribed, the holdings of the Existing Shareholders will be diluted by approximately
2.15%.

E.7 Estimated expenses charged to investor

Not applicable; Monzo will not charge investors any separate costs or expenses in respect
of the Offer.
 - 12 -

RISK FACTORS

An investment in Monzo involves a high degree of risk. The risks and uncertainties below
are those that the Directors, the Proposed Director and Monzo consider to be material.
You should carefully consider the following information about these risks, together with
the information contained elsewhere in this Prospectus, before deciding to buy any
Shares. Each of these risks could have a material adverse effect on the Group's business,
financial condition, results of operation, future prospects or the price of the Shares.
Monzo has described the risks and uncertainties that it believes are material, but these
risks and uncertainties may not be the only ones that the Group faces. Additional risks
and uncertainties relating to the Group that are not currently known to Monzo, or that it
currently deems immaterial, may also have an adverse effect on the Group's business,
financial condition, results of operations and future prospects.

The order in which the risks are presented does not necessarily reflect the likelihood of
their occurrence or the magnitude of their potential impact on the Group's business,
financial condition, results of operation, future prospects or the value of the Shares.
Investors should consider carefully whether an investment in the Shares is suitable for
them in light of the information in this document and their personal circumstances.

1. MACRO-ECONOMIC RISKS

1.1 The Group is subject to risks arising from the global macroeconomic environment

The Group's business is subject to inherent risks arising from macroeconomic conditions
in the UK, the Eurozone and globally, both generally and as they specifically affect
financial institutions. As the Group's revenue is derived entirely from customers based in
the UK, the Group is particularly exposed to the condition of the UK economy. During the
global financial crisis that started in mid-2008, the UK economy experienced significant
turbulence and periods of recession, adversely affecting, among other things, market
interest rates, levels of unemployment, the cost and availability of credit and the liquidity
of the financial markets.

While economic indicators in the UK have improved considerably since the peak of the
financial crisis, economic recovery remains sluggish and the outlook for the UK economy
remains uncertain. If UK economic conditions weaken, or if financial markets exhibit
uncertainty or volatility, including as a result of the UK's exit from the European Union, a
downgrade in the credit rating of the UK Government or the wider outlook of the UK
banking sector, the Group's ability to grow its business could be materially adversely
impacted.

In addition, prevailing economic conditions in the Eurozone, including the possibility of

more macro-economic deterioration and/or continuing or worsening of financial market
instability, may pose a risk to the Group's business, despite the Group having only a
limited direct financial exposure to the Eurozone. In recent years, the UK financial
markets have been negatively impacted by ongoing fears surrounding the large sovereign
debts and/or fiscal deficits of several countries in Europe. These impacts are felt in the UK
economy generally and by UK financial institutions. Market volatility in the Eurozone can
have an adverse impact on consumer confidence, spending and demand for credit in the
UK.

Weak economic conditions in the UK could lead to higher levels of unemployment or

stagnation in wages, which have historically resulted in deferred or reduced levels of
spending. Market turmoil and economic volatility, especially in the UK (but also in the
 - 13 -

Eurozone or wider global economy), could have a material adverse effect on the liquidity
and financial condition of the Group's customers, affect consumer confidence, spending
and demand for credit, which could, in turn, impair the Group's loan portfolio. Retail
consumers are particularly sensitive to adverse developments in the economy, and they
may represent a relatively higher degree of risk than lending to other groups, such as
large corporations. A deterioration in economic and market conditions could result in a
deterioration in the financial condition of the Group's customers and increased retail loan
losses, which could adversely affect the Group's business, financial condition, results of
operations and prospects.

1.2 The Group is subject to risks caused by interest rate changes

Fluctuations in interest rates are influenced by factors outside the Group's control (such
as the fiscal and monetary policies of governments and central banks and UK and
international political and economic conditions) and can affect the Group's results,
profitability and consequential return on capital. In recent years, interest rates have been
historically low; the Bank of England base rate increased from 0.5% to 0.75% in August
2018 after having been at 0.5% since November 2017.

The Group holds a significant proportion of the customer deposits that it does not lend, in
central banks. Whilst central bank deposits are relatively low credit risk, this strategy does
expose the Group to a certain degree of interest rate revenue risk.

If the base rates of central banks were reduced to zero or a negative figure, the Group
would be exposed to a risk of financial loss as it would not receive interest on its deposits
(and, in the case of a negative rate, would be required to pay to make deposits).

Whilst the Group has policies and procedures in place to mitigate its interest rate risk, any
of these scenarios could have a material adverse effect on the Group's business, financial
condition and result of operations.

1.3 Possible deterioration of the UK consumer credit market

The Group's business strategy includes granting unsecured overdrafts and loans to its
current account holders. There are currently concerns regarding the continuing growth of
consumer credit in the UK. If there was disruption to the credit market or an adverse
change in economic or political conditions that had a disproportionate effect on that
segment of the market, the Group could be exposed to proportionately greater losses
than some of its competitors as its lending is focussed solely on unsecured UK consumer
loans. Such an adverse change in economic or political conditions may arise as a result of
the on-going withdrawal of the UK from the EU, the impact and consequences of which
remain uncertain. Any deterioration in customers' ability or willingness to repay credit
could have a material adverse effect on the Group's business, financial condition and
results of operations.

1.4 Brexit could affect the Group's results

On 29 March 2017, the UK Government notified the EU of its intention to withdraw from
the EU ("Brexit"). The UK is currently expected to cease being a member of the EU on 29
March 2019, and the Group faces risks associated with the UK's exit. A significant
proportion of the regulatory regime applicable to Monzo in the UK and anticipated
regulatory reform is derived from EU directives and regulations. In addition, Monzo
currently has the option to benefit from EU measures which reduce barriers in the
financial services industry, such as the "passporting" regime which entitles Monzo to
operate anywhere in the EU under its UK banking licence. Monzo does not currently
 - 14 -

provide any services in other European countries other than the UK. Monzo has recently
completed passporting to the Republic of Ireland, and while Monzo does not currently
exercise those rights, the exercise of those rights may become part of its future strategy.
Brexit could also result in restrictions on movement of capital and the mobility of
personnel.

There is currently considerable uncertainty surrounding the UK's implementation of EU

derived law and regulations following Brexit, and it is unclear whether the UK and EU will
reach a satisfactory agreement on financial services. Any of these risks could result in
higher operating costs or could affect the Group's ability to conduct its business in the EU
and could have a material adverse effect on the Group's operations in the EU.

2. RISKS RELATING TO THE OPERATIONS OF THE GROUP

2.1 The Group is subject to risks arising from its business strategy

The Group has a limited operating history in the UK financial services market and faces
risks associated with the implementation of its strategy, including operational, financial,
macroeconomic, market, pricing and technological challenges. In the short to medium
term, the Group's strategy will be focussed on: (i) the growth of its user base; (ii) the
introduction of new products and services, including the continued roll-out of its current
account, overdraft, loan facilities and financial marketplace for other products; (iii)
reaching profitability through the revenues generated by these new products; and (iv)
expansion to new geographies. There can be no guarantee that the Group will be able to
achieve these goals or implement its strategy within the timescales envisaged.

In recent years, there has been an increased focus by UK regulators on the

appropriateness and sustainability of the business models and growth strategies of
regulated firms such as Monzo. Regulators no longer focus exclusively on the financial
strength of regulated firms but also consider non-financial resources, including
governance and infrastructure, available to the firm in assessing the sustainability of the
business model and whether it continues to meet regulatory requirements. In addition,
certain regulators have the power to restrict regulated firms' ability to develop products. If
the Group's regulators believe that it does not have a sustainable business model or does
not meet any of the regulatory conditions, they could remove or restrict the Group's
operating licences and/or the way in which it conducts its business.

Additionally, the success of the Group's business strategy is dependent on its

technological infrastructure and the ability to scale its operations in line with its planned
growth.

Other factors may also affect the Group's ability to pursue its business strategy. For
example, the success of the Group's business strategy requires getting significant
numbers of new customers in an increasingly competitive environment and will require
management to make complex judgements, including anticipating customer trends and
needs across a range of financial products, and structuring and pricing its products
competitively. The inability of the Group and its Directors to implement this business
strategy for any reason could have a material adverse effect on its business, financial
condition, results of operations and prospects.

2.2 The Group is subject to risks resulting from changes in trends of debit card usage

The Group is a digital challenger bank and users' transactions are made through their
debit cards. Unlike other more established banks, the Group does not have branches or
intend to offer more "physical" methods of payment such as cheque books or ATMs to its
 - 15 -

users. Current market trends indicate that debit card usage is increasing (particularly with
the introduction of contactless technology), but if these consumer trends change, there is
the chance that the Group may not be able to respond as quickly as some of its
competitors. If the Group was unable to respond quickly enough to changing consumer
trends or habits in debit card usage, this could reduce the Group's customer base and, in
turn, the value of its deposits and loan book. This could have a material adverse effect on
the Group's business, financial condition and results of operations.

2.3 The Group is subject to risks relating to the cost and availability of funding

The availability of deposits for the Group may be impacted by increased competition from
other deposit-takers (including other mobile app-based providers and challenger banks).
The Group does not currently access wholesale funding. Going forward, there may be
factors outside of Monzo's control that may constrain the volume of liquidity in the market.
The Group's ability to access other funding sources on satisfactory economic terms is
also subject to a variety of factors, a number of which are outside its control, including
interest rates, liquidity constraints, general market conditions, increased competition,
regulatory requirements and any loss of confidence in the UK banking system.

The Group currently relies exclusively on retail deposit funding and a loss in customer
confidence in the Group could significantly reduce the number of individuals willing to
make deposits. While the Group does not currently intend to rely on wholesale funding, if
access to deposit funding were constrained, the Group may need to make greater use of
the wholesale funding markets, if available. There is no guarantee that the Group would
be able to get wholesale funding on commercially attractive terms, or at all. If the
wholesale funding markets were to be fully or partially closed, it is likely that funding
would prove more difficult to get.

While the Group is currently highly liquid, going forward liquidity constraints may impair
the Group's ability to meet regulatory liquidity requirements or financial and lending
commitments (including in the event of an unexpected increase in customer withdrawals).
Liquidity constraints may also impair the Group's ability to pursue its strategy and
business plan in full or in accordance with the timescales currently envisaged. If the
Group failed to manage these or any other risks relating to the cost and availability of
liquidity and funding, this could have a material adverse effect on the Group's business,
financial condition and results of operations.

The Board does not consider these to be foreseeable risks which could cut across the
working capital statement contained in paragraph 15 of Part VII of this document.

2.4 The Group faces risks from competition

The market for financial services in the UK is competitive, and competition may intensify
in response to consumer demand, technological changes, the impact of market
consolidation and new market entrants, regulatory actions and other factors. The financial
services markets in which the Group operates are mature, and growth by any bank
typically requires getting market share from competitors.

The Group faces competition from established providers of financial services, including
banks and building societies, some of which have substantially greater scale and financial
resources, broader product offerings and more extensive distribution networks than the
Group. This means that more established providers of financial services may be more
resilient due to greater resources than the Group during periods of economic volatility or
reduced consumer demand. The growth of the Group's customer base is a core part of
the Group's strategy and the Group may also incur increased marketing costs as a result.
 - 16 -

In addition, as a result of their large established deposit and asset base, established
banks are often better positioned to offer cash incentives to attract new customers, as
well as higher temporary "teaser" interest rates for deposits or lower temporary rates for
loans and overdrafts.

The Group also faces potential competition from new banks in the UK and banking
businesses developed by large non-finance companies such as Tesco and Sainsbury's.
Additionally, the Group faces competition from other "challenger bank" and financial
technology (“fintech”) entrants such as Metro Bank, Starling Bank and Revolut.

The retail banking and payments market is in the process of potentially major change as a
result of the introduction of the Second Payment Services Directive ("PSD2") and Open
Banking. These initiatives have the potential to open up the market to new entrants who
are not banks and who are instead authorised as account information service providers or
payment initiation service providers. As a result of these developments, the Group could
face increasing competition from new entrants into the market looking to use bank
systems and processes but without the cost burden that being an authorised bank entails.
This could put pressure on the Group's customer base and projected growth.

The Group faces competitive pressure in relation to the payment systems it uses in
connection with its debit cards from both established and non-traditional payment
processors. The Group continues to rely on certain competitors to provide important
payment clearing services, and these competitors could (subject to regulatory
considerations) impose significant fees or restrictions on the Group to access these
systems.

Any failure to manage the competitive dynamics to which the Group is subject could have
a material adverse effect on its business, financial condition and results of operations.

2.5 The Group is subject to risks concerning customers' credit quality

The Group is exposed to customers (with a lending product such as an overdraft) whose
credit quality can have a significant adverse impact on the Group's earnings. The Group
uses credit scores provided by a third party. The credit scores provided by the third party
are based on a number of factors, including credit data and credit scores provided by
other credit reporting agencies. There is a risk that this information could be outdated,
incomplete or inaccurate. Accordingly, a credit rating assigned to a borrower by the third
party may not reflect that borrower’s actual creditworthiness at the time of application.
There is also a risk that, following the time of application, a borrower may become unable
to meet their commitments as they fall due as a result of customer-specific circumstances,
macroeconomic disruptions or other external factors.

Actual levels of default may be higher than the Group expects. All overdrafts and loans
granted by Monzo are unsecured. Unsecured obligations pose a greater credit,
insolvency, bankruptcy and liquidity risk for a lender compared to secured obligations (eg
a mortgage over a property). This means that, if a borrower defaults on a Monzo overdraft
or loan, Monzo is less likely to be able to recover all or any portion of the amounts lent
(compared to secured lending) which may result in higher impairment charges or a
negative impact on fair value in Monzo's loan portfolio, either of which may adversely
affect the value of assets on Monzo's balance sheet. More generally, if any borrower who
has an overdraft or loan agreement with Monzo ceases to be a UK resident and fails to
repay the loan, enforcement of the loan may be more difficult and costly.

Any of the above issues could have a material adverse effect on the Group's business,
financial condition and results of operations.
 - 17 -

2.6 The Group is subject to wholesale credit risk

Monzo has a small number of wholesale credit risk exposures for operational purposes
and holds all of its surplus liquidity in cash at central banks. A proportion of Monzo's funds
may also be put up as security under payment schemes with other banks. Whilst the risk
of default is low, there is a risk that these counterparties may default on their repayment
obligations to Monzo. Any defaults could have an impact on Monzo's availability of
funding and could have a material adverse effect on the Group's business, financial
condition and results of operations, though the Board does not consider these to be
foreseeable risks which could cut across the working capital statement contained in
paragraph 15 of Part VII of this document.

2.7 The Group's brand or reputation may be damaged

The Group’s success and results are dependent in part on the strength and reputation of
its brand and the Group identifies reputational risk as one of its largest risks. The Group's
brand is relatively new and there is no guarantee that it will be able to continue to
successfully develop its brand and grow its market share. Reputational issues could result
from a number of factors attaching to the Group's business, including, but not limited to:

• operational failures;

• failing or, facing allegations of, having failed to appropriately address potential
conflicts of interest;

• breaching or facing allegations of having breached legal and regulatory requirements

(including conduct of business, money laundering and anti-terrorism financing
requirements and capital adequacy requirements);

• acting or facing allegations of having acted unethically (including having adopted

inappropriate sales and trading practices);

• litigation or other disputes;

• misconduct by employees or others involved in the Group's business;

• negative press or social media comment, whether or not founded;

• failing or facing allegations of having failed to maintain appropriate standards of

customer privacy, customer service and record keeping;

• technology failures that impact customer services and accounts;

• being the subject of a cyber-attack;

• failing to properly identify conduct, legal, reputational, credit, liquidity and market
risks inherent in the products it offers;

• generally poor company performance; and

• risks of association in respect of issues being faced by competitors or the banking

industry generally, which may or may not be directly applicable to the Group.

Any damage to the Group’s brand or reputation could cause existing customers, users,
partners or intermediaries to withdraw their business from, or restrict their business with,
the Group. Such damage to the Group’s brand or reputation could cause disproportionate
 - 18 -

damage to its business, even if any negative publicity is factually inaccurate or

unfounded. Furthermore, negative publicity could result in greater regulatory scrutiny and
could influence market perception of the Group. The occurrence of any of these events
could have a material adverse effect on the Group's business, financial condition and
results of operations.

2.8 The Group is subject to the risk relating to its IT systems and related IP rights

The Group's business is dependent on the Information Technology ("IT") infrastructure

behind its smartphone app, including the processing of a high volume of complex
transactions efficiently. The Group has developed its own software to do this, and also
uses third party service providers in connection with the provision, operation, and
maintenance of IT systems. As its business expands, the Group expects to continue to
upgrade and introduce new IT systems. Any weaknesses or failures of its IT systems,
including any upgrades or new IT systems, may cause an interruption or delay in, or
unsatisfactory delivery of, service; loss or corruption of data or confidential information.
Any such weaknesses or failures could therefore inconvenience users which could have a
subsequent effect on the Group's brand and reputation.

As some of the Group's operations interface with or depend on IT systems operated by

third parties and which are outside of the Group's control, there can be no assurance that
the Group will not encounter issues which could result in the loss of important data,
interruptions, delays or cessations in the availability of the systems. The Group’s IT
systems, like other banks, are also exposed to a number of cybersecurity-related risks,
including being targeted by hackers looking to access commercially sensitive or personal
data held by the Group or being a victim of malicious software or other viruses.

While the Group takes measures to protect against the risk of data loss or breach, there
remains a risk that employees might lose or disclose data (for example, by forwarding an
email containing data to an unauthorised third party) or that the Group's systems could be
subject to a data breach, whether sustained or one-off. The Group is therefore exposed to
a risk of regulatory fines, legal and public relations costs and other remediation costs
arising from data loss. In addition to the financial losses that the Group could sustain as a
result of a data loss or breach, the Group is also exposed to a risk of damage to its brand
or reputation.

The Group's intellectual property ("IP"), on which the bespoke elements of its IT systems
and its brand are based, is central to the value and functioning of its business. Although
the Group does not hold any patents, it typically protects such IP rights by, for example,
ensuring that any IP produced by its employees is retained by the Group and by relying
on confidentiality clauses in employee contracts and non-disclosure agreements with third
parties, but there is an inherent risk of employees or third parties infringing those rights or
challenging the Group's ownership of those rights. The Group may not always be
successful in enforcing or protecting its IP rights and defending any misuse of its IP which
could affect the value of its brand or IT systems.

Any of the above risks could have a material adverse effect on the Group's business,
financial condition and results of operations.

2.9 Claims and litigation could impact upon the Group's reputation and earnings

The Group could face legal and regulatory proceedings in the course of its business.
Risks relating to these proceedings may arise for a number of reasons, including: (i) the
Group's business may not be, or may not have been, conducted in accordance with
applicable laws or regulations; (ii) contractual obligations may either not be enforceable
 - 19 -

as intended or may be enforced in a way that is adverse to the Group; (iii) liability for
damages may be incurred by third parties harmed by the conduct of the Group's
business; and (iv) third parties may allege that the Group has infringed their intellectual
property rights (whether through trademark infringement or otherwise). There can be no
assurance that the Group will prevail in any future litigation or regulatory proceedings. Any
litigation or other proceedings, whether or not determined in the Group's favour or settled
by the Group, could be costly and may divert the efforts and attention of the Group's
management and other personnel from normal business operations. In addition, any
proceedings could adversely affect the Group's reputation and the market's perception of
the Group and the products and services that it offers, as well as customer demand for
those products and services, which could have a material adverse effect on the Group's
business, financial condition and result of operations.

2.10 The Group is subject to the risk of losses resulting from fraud

Fraud is a risk affecting the retail banking and lending industry in general. The Group may
be affected by fraud, misrepresentation or omission ("Fraudulent Activity") on the part of
its customers or by other users of the Group's services (whether authorised or
unauthorised). Although Monzo has put in place policies and procedures to reduce the
risk of Fraudulent Activity, such measures may not be sufficient in all cases to prevent
loans being originated, or transactions being processed, on the basis of Fraudulent
Activity. Fraudulent Activity may adversely affect Monzo's ability to enforce its contractual
rights or to require the borrower to repay principal or interest on any loan. In the event of
Fraudulent Activity in respect of a loan, Monzo may have the right to terminate the loan
agreement and seek enforcement, but there is a risk that the alleged borrower in question
may not be obliged to repay the loan (e.g., in the event of identity theft) or cannot be
located.

Despite the systems and procedures that Monzo has in place, there is also a risk of
internal fraud or theft being committed by one or more employees, which could negatively
impact the Group's brand or reputation. Monzo is also subject to the risk of unauthorised
use of its users' debit cards. Third parties could get money or underlying goods and
services through deception, including through theft of a user's card or through disclosure
of details by an illegitimate website or merchant.

Whilst Monzo invests in anti-fraud technology, high levels of fraud could have a material
adverse effect on the Group's reputation, business, financial condition and results of
operations.

2.11 The Group is subject to risks relating to its dependence on Directors and senior
management team and its ability to continue to access a suitable talent pool

The Group's future growth and success depends, in part, upon the leadership and
performance of its Directors and management team, many of whom have significant
experience in the sector. The loss of any of the Directors, or any members of the senior
management team or other key employees, the inability to recruit, motivate and
incentivise sufficient qualified personnel, or the inability to replace departing employees in
a timely manner could affect the Group's ability to run its business and could therefore
have a material adverse effect on its business, financial condition and results of
operations.

In addition, the Group relies on the expertise provided by third party consultants and key
industry contacts who support the business. If any key consultants or advisors ceased
working with the Group, it would need to identify other individuals with expertise in these
areas and there is no guarantee that it would be able to do so. The inability to identify
 - 20 -

alternative consultants and advisors could have a material adverse effect on the Group's
business, financial condition and the result of operations.

2.12 The Group is subject to risks associated with international expansion

The Group currently only offers its products to consumers in the United Kingdom. The
Group is looking to expand its operations internationally and enter additional markets,
including the United States (Monzo Support US will not offer any financial products or
services into the US or the UK) and the European Union, which involves various risks and
will require significant management attention. Any such expansion may strain existing
management resources. International operations are also subject to other inherent risks,
including: unexpected changes in regulatory requirements; reputational risk; and
potentially adverse tax consequences.

2.13 The Group faces risks relating to taxation

Any change in the Group’s tax status or in tax legislation or its interpretation could affect
the Group’s income. The nature and amount of tax which the Group expects to pay and
the reliefs expected to be available to the Group are each dependent upon a number of
assumptions, any one of which may change and which would, if so changed, affect the
nature and amount of tax payable and reliefs available. Any such changes could have a
material adverse effect on the Group's business, financial condition and results of
operations.

3. REGULATORY RISKS

3.1 Monzo, as a regulated entity, is subject to regulatory intervention

Monzo is authorised by the Prudential Regulation Authority (the "PRA") and is regulated
by the both the PRA and the Financial Conduct Authority (the "FCA").

As a result, it must comply with the rules and regulations issued by both the PRA and the
FCA, including those set out in the PRA Rulebook and the FCA Handbook. These include
specific rules relating to prudential capital and liquidity requirements, and regulatory
action in the event of bank failure, as well as conduct of business rules (in particular,
around disclosure and promotions) and general principles of business, including the
requirement to treat customers fairly. Monzo is, therefore, susceptible to decisions outside
of its control by regulators relating to capital structure, its governance arrangements and
the remuneration it pays to its employees and other staff.

Failure to comply with any of these requirements could bring regulatory intervention,
including financial sanction or the imposition of restrictions on the Group's business.

Both the PRA and the FCA continually monitor and amend the regulatory framework and
there is a risk that changes could have a negative impact on the Group's business model.
There is also a risk that HM Treasury could introduce new regulated activities or
regulatory requirements that impact the business model. Any of these changes are
outside of Monzo's control and could expose the Group to significant regulatory
compliance costs and any changes in the regulation of collections activity for regulated
credit agreements might adversely affect recovery activities.

3.2 Payment Services Regulations 2017

Monzo's current account activity, including its overdraft is subject to the requirements of
the Payment Services Regulations 2017 ("PSRs"). These requirements include
regulations governing the information that must be given to customers, how quickly
 - 21 -

payments must be executed and a number of refund and liability provisions for when
things go wrong.

If Monzo is found to have failed to comply with any of those requirements it could be
subject to regulatory action from the FCA and/or could be the subject of direct claims from
customers.

In addition, under the PSRs, Monzo is responsible for any unauthorised transactions on
the account except in limited circumstances where the customer can be made liable. This
means significant levels of fraudulent activity could have an impact on the Group's
business and financial condition.

Going forward, from September 2019, the PSRs will require the Group to give access to
its accounts to third party providers of the two new regulated payment services: Account
Information Services and Payment Initiation Services as well as make sure it implements
the use of strong customer authentication when customers carry out certain actions on
their account.

3.3 Consumer Credit Act 1974

The overdrafts and loans offered by Monzo are regulated by the Consumer Credit Act
1974 (the "CCA"). The CCA imposes specific sanctions for breach of its requirements.
For example, errors in documenting credit agreements and post-contract information
(such as annual statements and notices of sums in arrears) may make the agreement
unenforceable without a court order and bar the lender from charging interest until the
error is corrected. A failure to document the agreement correctly can make the loan
unenforceable without a court order. A borrower may also challenge the loan agreement
on the basis that it created an "unfair relationship" between the lender and the borrower. If
successful, a court may make an order (among other things) requiring the lender to repay
amounts received from the borrower. There is no statutory definition of "unfair", allowing
for broad judicial discretion in applying the test according to individual circumstances.

Borrowers have the right to bring claims under the Financial Ombudsman Service ("FOS")
and a right to claim compensation for losses resulting from any contravention of FCA
rules.

If Monzo is found to have failed to comply with any requirements under the CCA it could
be exposed to significant financial consequences which could have a material adverse
effect on the Group's business, financial condition and results of operations.

3.4 Prudential regulatory capital and liquidity requirements

The prudential regulatory capital and liquidity requirements to which the Group is subject
may change, including as a result of binding regulatory or implementing technical
standards or guidance to be developed by the European Banking Authority, changes to
the way in which the PRA interprets and applies these requirements to UK banks or more
changes to the requirements that may arise at an EU or national level. If the Group fails to
meet its minimum regulatory capital or liquidity requirements, it may be subject to
administrative actions or sanctions. In addition a shortage of capital or liquidity could
affect the Group’s ability to pay liabilities as they fall due and could affect the
implementation of its business strategy. The Board does not consider these to be
foreseeable risks which could cut across the working capital statement contained in
paragraph 15 of Part VII of this document. However if, in response to any capital
shortage, the Group raises additional capital through the issuance of share capital or
 - 22 -

capital instruments, Existing Shareholders may experience a dilution of their holdings or

reduced profitability and returns.

3.5 General Data Protection Regulation

Monzo collects, controls and processes large amounts of personal data on a daily basis
and the protection of this data is of key importance to the Group's business and to
customers’ confidence in its products and services. Monzo must comply with applicable
laws regarding data protection, including the EU's General Data Protection Regulation
("GDPR"), which imposes broader and stricter compliance requirements regarding data
protection than previous laws. The Group has procedures in place intended to make sure
that any personal data it collects, processes and holds is handled securely and disposed
of properly in accordance with applicable laws, and has implemented a programme to
make sure its use of personal data has been and is compliant with GDPR. Any violations
of data protection laws by the Group could subject it to litigation, fines, penalties, or other
regulatory action which individually or in the aggregate could be costly. Since the GDPR
was implemented, the potential size of these has increased significantly to a maximum of
the higher of €20 million or 4% of turnover, and there is also a greater risk of civil litigation
actions. Violations of data protection law could also lead to brand or reputational damage
or a loss of customer confidence in the Group. Such issues could have a material adverse
effect on the Group's business, financial condition and results of operations.

3.6 The Group is subject to risks arising from any non-compliance with anti-money
laundering ("AML") laws

The Group faces potential exposure to money laundering activities through its current
accounts, which could be used to funnel, transfer or clear illicit funds.

The Group has in place AML policies, processes and procedures. Although the Board
believes that such policies, processes and procedures are adequate, effective and comply
with applicable AML laws and regulations, it cannot guarantee that they eliminate the risk
of money laundering, including actions by the Group's staff, for which the Group might be
held responsible.

3.7 Monzo will be subject to rules relating to regulatory action in the event of bank
failure

The special resolution regime (the "SRR") was established under the Banking Act 2009
(the "Banking Act") to provide a mechanism for resolving failing firms where failure of a
firm was imminent and the other powers of the relevant UK authorities (HM Treasury, the
Bank of England, the PRA and FCA) to address the situation are insufficient. Its aim is to
ensure that financial institutions should be able to fail without excessive disruption to the
financial system, without avoidable interruption to critical economic functions provided by
firms, and without exposing taxpayers to costs. If Monzo were failing or was deemed likely
to fail, the SRR gives authorities a number of different toolkit options, these include bail-in
or resolution powers under which Existing Shareholders may experience a dilution or
cancellation of their holdings.

Monzo is also subject to the Banking Recovery and Resolution Directive 2014/59/EU (the
"BRRD"). The BRRD is a European directive relating to the recovery and resolution of
credit institutions and systemically important investments firms. The existing pre-BRRD
recovery and resolution framework in the UK was expanded to ensure that it complied
fully with the BRRD. The BRRD means Monzo will also be required to meet a minimum
requirement for own funds and eligible liabilities ("MREL") capable of being bailed-in. The
 - 23 -

implementation of the MREL requirements may require the Group to raise additional
capital or adjust its current capital levels.

Finally, the BRRD requires that certain claims of certain depositors and the Financial
Services Compensation Scheme (the "FSCS") (to the extent it covers claims of depositors
in a bank insolvency) are given preferential status in the bank insolvency. Where Monzo
has large numbers of depositors entitled to Financial Services Compensation Scheme
protection, this means those depositors and the FSCS will get preferential treatment
ahead of other unsecured creditors generally, but this will not affect amounts distributable
to shareholders, which rank last on any insolvency in any event.

4. RISKS RELATING TO THE SHARES

4.1 Investment may not be suitable for all investors

An investment in Monzo is only suitable for investors capable of evaluating the risks and
merits of the investment and who have sufficient resources to bear any loss that may
result from the investment. A prospective investor should consider with care whether an
investment in Monzo is suitable for that investor in light of that investor's personal
circumstances and the financial resources available to that investor. The investment
opportunity described in this document may not be suitable for all recipients of this
document. Applicants should consult a legal adviser, financial adviser authorised under
FSMA or tax adviser for advice if they have any concerns or questions about the contents
of this document or the subscription for the E Ordinary Shares before making their
decision to invest. Investment in Monzo should not be regarded as short-term in nature.
There can be no guarantee that any appreciation in the value of Monzo will occur or that
the Group's commercial objectives will be achieved. Applicants may not get back the full
or any amount initially invested.

4.2 Potential investors should seek their own tax advice

Statements in this Prospectus in relation to tax and concerning the taxation of investors in
respect of the Shares are based on current tax law and practice which are subject to
change. Investors should take their own tax advice as to the consequences of owning
shares in Monzo as well as receiving returns from it. The taxation of an investment in
Monzo depends on the specific circumstances of the relevant investor. In particular,
investors should be aware that ownership of shares in Monzo can be treated in different
ways in different jurisdictions.

4.3 The Shares are subject to restrictions on transfer and there is currently no public
trading market for the Shares

The Shares are not freely transferable and are subject to the detailed restrictions on
transfer as set out in the Articles (see Part VII, paragraph 4.2(l)). There is currently no
public trading market for the Shares. Save for transfers made in accordance with the
Articles, the Shares thus represent an illiquid investment, with no certainty of when and
how shareholders will be able to sell the Shares.

4.4 The issue of additional shares may dilute all other shareholdings

More equity financing may be dilutive to the Shareholders or result in an issuance of

securities whose rights, preferences and privileges are senior to the holders of Shares.
The Group may seek debt finance to fund all or part of any future development, but there
can be no assurance that the Group will be able to raise debt finance, whether on
attractive terms (including acceptable covenants) or at all.
 - 24 -

4.5 Existing Shareholders may limit other shareholders’ ability to influence Monzo and
its strategy

Under the Shareholders' Agreement entered into as part of the Series E Investment
Round, various matters require the consent of:

(a) an Investor Majority;

(b) the Board; and/or

(c) a majority of the holders of A1 Ordinary Shares; A2 Ordinary Shares; B Ordinary

Shares; C Ordinary Shares, D Ordinary Shares or E Ordinary Shares (as separate
classes) in each case held by some of Monzo's investors.

In certain circumstances, these Shareholders may be able to influence Monzo's activities

and strategy more than other holders of the Shares. As such, Applicants may not be able
to exercise the same degree of influence over Monzo as these Shareholders. Applicants
should consider if they are comfortable that the rights attaching to their Shares may not
be as comprehensive as those enjoyed by Existing Shareholders.

4.6 A return on your investment cannot be guaranteed

Applicants may not be able to get back some or all of their original investment or may not
receive the returns expected. This could happen for a number of reasons, including that:

• the price at which an investor is able to sell its Shares is less than the price paid for
them;

• an investor is unable to sell its Shares at all;

• Monzo does not pay dividends;

• Monzo's operational or financial performance is worse than expected; or

• Monzo becomes insolvent or is placed in receivership or liquidation.

While investors will have no liability to make any more payments in respect of any Shares
for which they subscribe, if Monzo becomes insolvent, the residual value of its assets may
not be sufficient for an investor to receive the full value of his or her original investment (or
there may be no residual value at all such that he or she may receive nothing).

4.7 Crowdcube Investors' voting rights

Crowdcube Investors will only hold a beneficial interest in the E Ordinary Shares issued in
connection to the Offer. Although all Shares have the same voting rights attached to
them, in practice the Crowdcube Nominee will exercise these rights on behalf of the
Crowdcube Investors, as directed by Crowdcube, in accordance with what Crowdcube
deems to be in the best interests of the Crowdcube Investors as a whole. Crowdcube will
take all the administrative decisions on behalf of the Crowdcube Investors, unless it
believes that a decision is required to be made by Crowdcube Investors collectively. In
such circumstances, Crowdcube will provide all relevant information in connection with
the decision and will open a poll in which Crowdcube Investors will be invited to vote.
Applicants should decide, in making their investment decision, whether they are
comfortable that the voting rights attached to the E Ordinary Shares which they will
acquire a beneficial interest in may not be exercised in exactly the same manner as
Existing Shareholders.
 - 25 -

IMPORTANT INFORMATION

General

No person has been authorised to give any information or make any representations other than
those contained in this document and, if given or made, such information or representations must
not be relied upon as having been authorised by Monzo. Without prejudice to any legal or
regulatory obligation on Monzo to publish a supplementary prospectus pursuant to section 87G of
FSMA and Rule 3.4 of the Prospectus Rules, the publication or delivery of this document shall
not, under any circumstances, create any implication that there has been no change in the affairs
of the Group since the date of this document or that the information in this document is correct as
at any time subsequent to its date.

This document is being furnished by Monzo solely for the purpose of the Offer. Any reproduction
or distribution of this document, in whole or in part, or any disclosure of its contents or use of any
information herein for any purpose other than this purpose is prohibited, except to the extent that
such information is otherwise publicly available. This document is not intended to provide the
basis of any credit or other evaluation and should not be considered as a recommendation by
Monzo that any recipient of this document should purchase or subscribe for the E Ordinary
Shares.

Overseas Shareholders

The implications of the distribution of this document to Overseas Shareholders may be affected
by the laws of the relevant jurisdictions in which such Overseas Shareholders are located. Such
Overseas Shareholders should inform themselves about and observe all applicable legal
requirements.

It is the responsibility of any person into whose possession this document comes to satisfy
himself as to his full observance of the laws of the relevant jurisdiction in connection with the
Offer and the distribution of this document.

Forward looking statements

This document contains forward looking statements which are based on the beliefs, expectations
and assumptions of the Directors and the Proposed Director about the Group's business. All
statements other than statements of historical fact included in this document may be forward
looking statements. Generally, words such as "will", "may", "should", "could", "estimates",
"continue", "believes", "expects", "aims, "targets", "projects", "intends", "anticipates", "plans",
"prepares", "seeks" or, in each case, their negative or other variations or similar or comparable
expressions identify forward-looking statements.

These forward looking statements are not guarantees of future performance, and there can be no
assurance that the expectations reflected in such forward looking statements will prove to have
been correct. Rather, they are based on the current beliefs, expectations and assumptions and
involve known and unknown risks, uncertainties and other factors, many of which are outside the
control of the Group and are difficult to predict, that may cause actual results, performance, plans,
objectives, achievements or events to differ materially from those expressed or implied in such
forward looking statements. Undue reliance should, therefore, not be placed on such forward
looking statements. Any forward looking statements contained in this document are subject to
(among other things) the risk factors described in the "Risk Factors" section of this document.
 - 26 -

New factors will emerge in the future, and it is not possible to predict which factors they will be. In
addition, the impact of each factor on the Group's businesses or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those described in any
forward looking statement or statements cannot be assessed, and no assurance can, therefore
be provided that assumptions will prove correct or that expectations and beliefs will be achieved.

Any forward looking statement contained in this document based on past or current trends and/or
activities of the Group businesses should not be taken as a representation that such trends or
activities will continue in the future. No statement in this document is intended to be a profit
forecast or estimate, or to imply that the earnings of the Group for the current year or future years
will match or exceed historical or published earnings of the Group. For the avoidance of doubt,
nothing in this document constitutes a qualification of the working capital statement contained in
section 15 of Part VII of this document.

Each forward looking statement speaks only as at the date of this document and is not intended
to give any assurance as to future results. Monzo and/or its Directors and Proposed Director
expressly disclaim any obligation or undertaking to release publicly any updates or revisions to
any forward looking statements contained herein as a result of new information, future events or
other information, except to the extent needed by the Prospectus Rules or applicable law. To the
extent required by the Prospectus Rules and other applicable law, Monzo will update or revise the
information in this document.

Currencies

In this document, references to "£", "pence", "sterling", "Pounds Sterling" or "GBP" are to the
lawful currency of the United Kingdom.

No profit forecast or estimate

No statement in this document is intended as a profit forecast or estimate and no statement in

this document should be interpreted to mean that profitability for the current or future financial
years would necessarily match or exceed the historical published profitability.

Rounding

Percentages and certain amounts included in this document have been rounded for ease of
presentation. Accordingly, figures shown as totals in certain tables may not be the precise sum of
the figures that precede them.

Third party information

Where third party information has been used in this document, the source of such information has
been identified. Monzo confirms that such information has been accurately reproduced and, so
far as it is aware and has been able to ascertain from information published by such third parties,
no facts have been omitted which would render the reproduced information inaccurate or
misleading.

Time

Any reference to a time in this document is, unless otherwise stated, a reference to a time in
London, England.

Website

The contents of Monzo’s website or of any website accessible via hyperlinks from Monzo’s
website or the Monzo App are not incorporated into, and do not form part of, this document.
 - 27 -

THE OFFER

1. THE OFFER

1.1 Introduction

Monzo is looking to raise up to £20 million by offering up to 2,592,520 E Ordinary Shares

(at a price of £7.7145 per E Ordinary Share (the "Offer Price")) to Eligible Monzo
Customers. If those customers do not acquire all of the E Ordinary Shares being offered,
Monzo will offer the remaining E Ordinary Shares to the Series E Investors on a pari
passu and pro rata basis. The Offer is not conditional on a minimum fundraising target.

All of the E Ordinary Shares Monzo is issuing in connection with the Offer will rank pari
passu with the existing E Ordinary Shares that are already in issue. Details of the rights
attaching to the E Ordinary Shares are set out in pages 89 to 97 of this Prospectus. The
Directors may refuse to register applications made by Eligible Monzo Customers for any
reason.

The Offer will only be open to Eligible Monzo Customers, which means individuals who,
as at the date of this document:

(a) have been approved as customers by Monzo having completed the new customer
application process via the Monzo App, including, for the avoidance of doubt,
Monzo customers who have not yet activated their debit card;

(b) are 18 years old or older; and

(c) are resident in the United Kingdom.

There are two types of Applicants and different timeframes apply to each as set out in
paragraph 1.3 below.

It is expected that all of the new E Ordinary Shares will be issued and registered no later
than 21 December 2018.

1.2 Net proceeds

If Monzo issues all of the E Ordinary Shares available under the Offer, it will raise gross
proceeds of approximately £20 million. The total costs, charges, and expenses payable
by Monzo in connection with the Offer are estimated to be £800,000. Therefore the net
proceeds will be £19.2 million.

1.3 Applying for shares

The Offer will open on 3 December 2018 and will close on 12 December 2018 (the "Offer
Period").

The Offer will comprise of two phases, with Eligible Monzo Customers who are already
Existing Crowdcube Investors being given priority:

(a) Phase 1, which will only be open to Eligible Monzo Customers who are Existing
Crowdcube Investors, will open at 10:00 am on 3 December 2018 and close no
later than 10:00 am on 5 December 2018 ("Phase 1"); and
 - 28 -

(b) Phase 2, which will be open to all Eligible Monzo Customers, will open at 10:00
am on 5 December 2018 and close no later than 10:00 am on 12 December 2018
("Phase 2").

All Applicants must agree to buy at least 1 E Ordinary Share.

Eligible Monzo Customers who are Existing Crowdcube Investors and apply in Phase 1
("Phase 1 Applicants") will be able to buy E Ordinary Shares up to a maximum value of
£2,000. Phase 1 does not operate on a first come first serve basis; there is a sufficient
number of E Ordinary Shares for all Eligible Monzo Customers who are Existing
Crowdcube Investors to take up to the maximum number of shares available.

Eligible Monzo Customers who apply in Phase 2 ("Phase 2 Applicants") will be able to
buy E Ordinary Shares on a first come first served basis up to a maximum value of
£2,000. Eligible Monzo Customers who are Existing Crowdcube Investors who do not
apply during Phase I can still apply during Phase II on a first come first served basis and
up to a maximum value of £2,000.

Applicants cannot submit more than one Application.

Applicants must have enough money in their Monzo account at the time of Application to
pay for any E Ordinary Shares that they seek to buy. Applicants are able to use their
overdraft for this payment – any such overdraft will be subject to the usual overdraft
charges (as described in paragraph 4.3 of Part I).

1.4 Reasons for the Offer

The proceeds of the Offer will help to expand the Group's business in line with the
breakdown in paragraph 1.5 below.

Monzo has primarily opted to raise funds by way of crowdfunding to let Eligible Monzo
Customers own part of its business and give them a greater share of ownership. Monzo
could have raised up to £20 million from venture capital firms, but wanted to give Eligible
Monzo Customers a chance to invest.

1.5 Use of proceeds

The proceeds will be primarily used by the Group to support business growth through
investment in product research and development, marketing and customer growth
initiatives, financing corporate development projects and expanding its operations team
geographically. Any remaining surplus funds will contribute to Monzo holding surplus
capital relative to its regulatory requirements. An estimated breakdown of funds usage is
provided below, in order of priority:

Business Area Estimated use of funding

Marketplace research and development £5 million

Other product research and development £7 million

Marketing and Customer Growth £5.2 million

Corporate Development projects £2 million

Expenses incurred for the Offer £0.8 million

 - 29 -

Total £20 million

2. TERMS AND CONDITIONS OF THE OFFER

2.1 Procedure for application

Applicants must complete and submit an application to invest and subscribe for E
Ordinary Shares (the "Application") through the Monzo App.

The Monzo App contains a link to www.monzo.com/invest, where a copy of this

Prospectus has been made available for a period of one week before the Offer opens.
Before submitting an Application, Applicants should read this Prospectus and, in
particular, the risk factors on pages 12 to 24, to ensure they understand the risks of
investing in Monzo and the terms and conditions of the Offer.

The link to this Prospectus will only be available to Eligible Monzo Customers who confirm
that they are based in the United Kingdom.

Eligible Monzo Customers cannot submit more than one Application. Each Application
must be submitted in accordance with the provisions set out in section 1.3 above.

Once the Offer Period has closed, successful Applicants will be contacted by Crowdcube
to access their beneficiary statement. Successful Applicants will be able to access their
beneficiary statements at any time by visiting www.crowdcube.com and either logging into
an existing Crowdcube account or setting up a new account.

A share certificate will be issued by Monzo to Crowdcube Nominee for the E Ordinary
Shares. Crowdcube will then issue beneficiary statements to successful Applicants.

Please note that if an Application has not been completed as per the instructions or if it
otherwise does not comply with the terms and conditions set out in this paragraph 2,
Monzo may, in its absolute discretion, treat it as valid and binding.

Applicants should read the terms and conditions set out in this paragraph 2 carefully
before submitting an Application. Applicants should consult a legal adviser, financial
adviser authorised under FSMA or tax adviser for advice if they have any concerns or
questions about the contents of this document or the subscription for the E Ordinary
Shares before making their decisions to invest.

2.2 Effect of the Application

By completing and submitting an Application on the Monzo App, Applicants irrevocably

and unconditionally:

(a) agree to buy the number of E Ordinary Shares set out in their Application;

(b) agree to the Crowdcube Terms as set out in the Monzo App;

(c) acknowledge that the Articles will apply to both their new E Ordinary Shares
applied for pursuant to such Application and any and all other Shares that they
hold from time to time;

(d) agree to Monzo sharing such information with Crowdcube as is needed to process
their Application;
 - 30 -

(e) acknowledge that they have no right to cancel their Application once it has been
made unless a supplementary Prospectus has been published – see paragraph
2.6 below;

(f) agree that Monzo may, in its absolute discretion, return the amount paid (at the
Applicant’s risk) without interest to their Monzo current account and choose not to
allot any E Ordinary Shares to such Applicant;

(g) agree that Monzo may choose not to allot E Ordinary Shares to Applicants where
the Applicant has breached or is reasonably suspected of breaching the terms
and conditions set out in this Prospectus or the Crowdcube Terms;

(h) authorise Monzo and/or Crowdcube (as applicable) to disclose any information
relating to their Application as is needed to comply with applicable laws, the
Shareholders' Agreement or as is appropriate for the purposes of the Offer,
including, without limitation, for the purposes of complying with the Money
Laundering Regulations;

(i) agree that any E Ordinary Shares to be allotted will be rounded down to the
nearest whole number and any excess money will be kept by Monzo for its
benefit;

(j) agree that all Applications and any related documents shall be governed by and
construed in accordance with the laws of England and Wales and that Applicants
submit to the exclusive jurisdiction of the Courts of England and Wales and agree
that nothing shall limit the right of Monzo to bring any claim, action, or legal
proceedings arising out of or in connection with any such Applications and related
documents; and

(k) authorise Monzo and/or Crowdcube (as applicable) to do all things necessary to
effect the registration of the E Ordinary Shares to be issued in Crowdcube
Nominee's name on behalf of the Applicant and authorise any representatives of
Monzo and/or Crowdcube (as applicable) to execute any documents as needed
and to enter Crowdcube Nominee's name on Monzo's register of members.

2.3 Acceptance of the Offer

At the end of the Offer Period and provided their Application has been received by Monzo
and is valid (or treated as being valid at Monzo's absolute discretion) the Offer shall be
deemed to be accepted by each Applicant once the E Ordinary Shares have been issued
and allotted to the Crowdcube Nominee.

Applicants will be notified of their allocation via the Monzo App. Monzo will take the
amount due from the Applicant's Monzo account immediately after they submit their
Application.

Monzo has the right to change or extend the deadline for submitting Applications and all
related dates set out in this Prospectus by making an announcement in the Monzo App or
where appropriate.

2.4 Warranties

By completing and submitting an Application on the Monzo App, Applicants:

(a) confirm that they are Eligible Monzo Customers;

 - 31 -

(b) confirm that they are making the Application in their own name and on behalf of
themselves;

(c) confirm that the information in their Application is true and accurate;

(d) confirm that their decision to submit the Application is based solely on the
information in this Prospectus and that they are not relying on any information or
representations in relation to the Group other than those in this Prospectus and
agree that any persons who are solely or jointly responsible for this Prospectus or
any part of it, shall have no liability for any such other information or
representations;

(e) agree that no person has been authorised to give any information or to make any
representation in relation to the Group or the E Ordinary Shares, and if given or
made, any such other information or representation should not be relied upon as
having been authorised by Monzo;

(f) agree that having had a period of one week to read this Prospectus, they have
been given notice of all information and representations contained in this
Prospectus;

(g) agree to provide Monzo and/or Crowdcube (as applicable) with any information
which they may ask for in connection with their Application or to comply with any
other relevant laws, including, without limitation, for the purposes of complying
with the Money Laundering Regulations;

(h) confirm that they have not made their Application in breach of the Money
Laundering Regulations or any other applicable law;

(i) confirm that they have complied with the terms and conditions set out in this
Prospectus, the Crowdcube Terms and all applicable laws; and

(j) confirm that they understand the risks associated with buying the E Ordinary
Shares and investing in Monzo and are able to bear the economic risk of their
investment in Monzo and are able to afford the loss of any such investment in
Monzo.

2.5 Data protection

Monzo may hold personal data (as defined in the Data Protection Act 2018) relating to
past and present Shareholders. Such personal data held is used by Monzo to maintain its
register of members and mailing lists and may be retained on record for a period
exceeding six years after it is no longer used. Monzo may also be required to share
certain information with Crowdcube for the purposes of processing Applications.

By becoming registered as a beneficial holder of E Ordinary Shares, an Applicant

becomes a data subject (as defined in the Data Protection Act 2018) and acknowledges
the processing by Monzo of any personal data relating to them in the manner described
above.

Article 30 of the Articles sets out further details on Monzo's use and transfer of personal
data relating to Shareholders.
 - 32 -

2.6 Supplementary Prospectus

Monzo may need to publish a supplementary prospectus before the end of the Offer
Period. A supplementary prospectus will be required if, before the end of the Offer Period,
a significant new factor, material mistake or inaccuracy relating to the information
provided in the prospectus arises or is noted.

If a supplementary prospectus is published by Monzo before the end of the Offer Period,
Applicants will be given two extra business days from the date that any such
supplementary prospectus is published to cancel their Application.

If Applicants choose to cancel their Application, Monzo will arrange for the amount paid to
be returned (at the Applicant’s risk) without interest to their Monzo current account.

2.7 Overseas persons

Monzo is offering E Ordinary Shares in the United Kingdom at the Offer Price on the
terms and conditions set out in this section headed "The Offer."

If you receive a copy of this Prospectus in a country other than the United Kingdom you
should not treat it as an offer to you and you should not make an Application. None of the
Shares to which the Offer relates have been or will be registered under the laws of any
jurisdiction outside of the United Kingdom or with any securities regulatory authority
outside of the United Kingdom.

No Application will be accepted if it shows that the Applicant is resident outside of the
United Kingdom.
 - 33 -

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the times and dates in the table below is indicative only and may be subject to change.
Please read the notes to this timetable set out below.

2018
Publication of Prospectus 26 November
Closing date of Offer 12 December
Expected date of issue by 21 December

Notes:
(1) The times and dates set out in the expected timetable of principal events above and mentioned in this document,
and in any other document issued in connection with the Offer are subject to change by Monzo, in which event
details of the new times and dates will be notified to Shareholders, where appropriate.

(2) Any reference to a time in this document is to the time in London, England, unless otherwise specified.
 - 34 -

DIRECTORS, PROPOSED DIRECTOR, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

Directors Tom Blomfield (Chief Executive Officer and Co - Founder)

Gary Dolman (Co - Founder)
Amy Kirk (Senior Independent Non-Executive Director)
Tim Brooke (Independent Non-Executive Director and
Chairman)
Keith Woollard (Independent Non-Executive Director)
Eileen Burbidge (Non-Executive Director – Passion Capital)
Miles Grimshaw (Non-Executive Director – Thrive)

Proposed Director Alwyn Jones (Chief Financial Officer)

Company Secretary Susan Adams Kuczynska

Registered and Head Office 38 Finsbury Square and 31, 33 and 35 Wilson Street
Address London EC2A 1PX

Legal advisers to Monzo Hogan Lovells International LLP

Atlantic House
Holborn Viaduct
London
EC1A 2FG

Independent Auditors Ernst & Young LLP

25 Churchill Place
Canary Wharf
London
E14 5EY

Accountants BDO LLP

55 Baker Street
London
W1U 7EU
 - 35 -

PART I
INFORMATION ON THE GROUP

1. BUSINESS OVERVIEW

Monzo was launched in February 2015 with the Founders’ aim being to build "the bank of
the future". It is a digital challenger bank, accessed through a smartphone app and has no
branch network.

The Group’s philosophy has been to focus on making something people want. Monzo
thinks people are tired of the traditional banking model, tired of hidden fees and charges,
endless paper forms, and nothing quite working in the way they would expect.

The Group’s strategy has been to build the bank around the user experience, seeking to
differentiate itself through its transparency and ease of use. In particular, the product is
marketed as being an account where transactions update instantly on customers' phones,
which sends intelligent notifications to aid customers' use of their account and which is
easy for customers to use.

Monzo was launched as a prepaid card product while permission was sought to accept
deposits as a bank. It gained its unrestricted banking authorisation from the PRA in April
2017 and closed the prepaid card to new applications in October 2017. Since December
2017, new customers have applied directly for a current account. Nearly 95% of prepaid
Active Customers were migrated to the current account and the prepaid card was closed
down on 4 April 2018.

In January 2018, Monzo trialled the provision of consumer credit to customers through an
overdraft on the current account with rollout to all customers by April 2018. Monzo plans
to start offering a fixed-sum loan product. Details of both products are set out below.

The Group's strategy is not to design a large number of Monzo products as traditional
banks have done but instead to focus on a core set of products and to operate as a
marketplace for other products. The intention is that customers will be able to access a
wide range of financial and non-financial products from the Monzo App to meet their
needs. For example, a customer with excess funds in their account at the end of each
month may choose to move them to a savings account or investment account available
through the Monzo App. A customer who makes an expensive purchase may choose to
insure it through the Monzo App.

Monzo intends to create what it considers to be seamless, relevant and convenient

experiences of this nature across all categories, including savings and investments,
mortgages, utilities and insurance. In doing so, Monzo strives to give all customers
simplicity and peace of mind through visibility and control of their finances.

Monzo is working on the Monzo Marketplace and has launched a "Beta" version in March
2018 to a very small range of customers. Monzo plans to roll out Marketplace features
over the course of 2018 and 2019.

Monzo currently only provides its banking services to customers based in the UK. In
February 2018 Monzo completed passporting to the Republic of Ireland. While Monzo
does not currently exercise those rights, the Group is considering expansion plans into
both Europe and the United States and has incorporated a non-banking subsidiary,
Monzo Support US, under the laws of Delaware in the United States. Once it becomes
 - 36 -

fully operational, it is intended that Monzo Support US will provide overnight customer
support services to UK customers.

2. THE MONZO PREPAID CARD

2.1 Overview

The Monzo Prepaid MasterCard Debit card was launched in October 2015, in partnership
with Wirecard, an authorised e-money institution. The card was issued by Wirecard which
was responsible for all regulatory requirements but was Monzo-branded and managed
through the Monzo App.

Key features of the product included:

• fee-free travel abroad (ATM fees for cash withdrawals may have applied);

• instant payment notifications;

• handy budget breakdowns; and

• ability to temporarily freeze lost or stolen cards through the Monzo App.

2.2 Target Market and Customer volumes

The prepaid card was targeted at early adopter, smartphone users. These customers
would have already been using mobile applications and other fintech services to assist in
elements in their daily life and, as such, Monzo anticipated would be the most comfortable
in trying out a beta product.

As at October 2017 when the card was closed to new applications, Monzo had more than
450,000 account holders. Monzo migrated nearly 95% of its prepaid Active Customers to
the current account and the prepaid cards were deactivated in April 2018.

2.3 Pricing and Revenues

There was no charge for the card itself. The only fee revenue from customers came from
a cash withdrawal fee of 3% for ATM withdrawals overseas (subject to the first £200 in the
last rolling 30 days on being fee-free) which came into effect January 2018.

In addition, Monzo received interchange income from MasterCard, based on

MasterCard's interchange rates.
 - 37 -

Gross revenues for the card were:

Prepaid Account
FY16 FY17 FY18

£'000 £'000 £'000

Interest on Prepaid - - -

POS Interchange - 110 2,735

ATM fees - - 57

Total prepaid revenue - 110 2,792

3. THE MONZO CURRENT ACCOUNT AND DEBIT CARD

3.1 Overview

Monzo carried out an initial test of the debit card and current account product between
July 2017 and October 2017 involving approximately 20,000 customers out of almost
500,000 prepaid customers.

The product was launched for new customers in October 2017 and nearly 95% of prepaid
Active Customers were migrated to the current account by the beginning of April 2018.

Key product features include:

• no charge for the account;

• fee-free travel abroad (ATM fees for cash withdrawals may apply);

• instant payment notifications;

• handy budget breakdowns;

• ability to temporarily freeze lost or stolen cards through the Monzo App;

• ability to set-up standing orders and direct debits, to edit standing orders, to track
upcoming direct debits and to manually retry failed direct debits;

• access to Faster Payments;

• Mastercard debit card with the account;

• Monzo to Monzo payments – customers can send money to friends with just their
phone number;

• live in-app customer support;

• opt-in block on gambling merchants;

• 3D Secure;

• Apple Pay and Google Pay - customers can use their Monzo card with Apple Pay
as well as Google Pay;
 - 38 -

• ability to send payment internationally from the Monzo App with TransferWise;

• pots - customers can set money aside within their main Monzo current account by
creating “pots”;

• ability to set goals for pots, track progress towards the goals and set up scheduled
payments into pots;

• ability to round up transactions to the nearest pound and put money aside into any
pot;

• ability to split bills through the Monzo App; and

• ability to pay cash into the Monzo account with PayPort at more than 28,000
stores across the UK.

Monzo customers receive FSCS protection up to the sum of £85,000.

Monzo has also recently launched the current account for 16 and 17 year olds as well as
joint accounts, both of which contain many of the key product features set out above.

3.2 Target Market and Customer volumes

The Group's mission is to make money work for everyone. Any UK resident with (or
without) an existing current account can apply for a Monzo account. As at the Latest
Practicable Date the total number of customers who have activated a Monzo current
account is over 1,000,000.

3.3 Pricing and Revenues

Pricing is the same as for the prepaid card but with the added revenues generated by the
additional products set out below.

Revenues are:

Current Account
FY17 FY183

£'000 £'000
Interest on Deposits n/a 115

POS interchange n/a 630

ATM fees n/a 89

Overdrafts n/a 10

Loans n/a -

Marketplace n/a 5

Total Current Account n/a 849

revenue

3
Figures are for full year to February 2018. At this time, Monzo was still conducting its current account migration project, with a total of
420,000 accounts, 365,000 of which were active.
 - 39 -

4. THE MONZO OVERDRAFT

4.1 Overview

The Monzo overdraft is available to existing customers and can be applied for through the
Monzo App.

Monzo has sought to differentiate it from other overdrafts on their market by using a clear
and easy to understand daily pricing model which customers can see in their Monzo App.

4.2 Target Market and Customer volumes

A "preview" stage was launched in Q3 2017 and continued until March 2018 during which
period customers could choose to trial the overdraft and Monzo could make sure it
worked in the way they expected it to.

From March 2018 the overdraft has been available to all existing customers, pending a
creditworthiness assessment. The overdraft is aimed only at existing customers and is not
marketed to the general public except as a feature of the Monzo account.

4.3 Pricing and Revenues

The overdraft features are subject to change depending on the feedback that Monzo gets
during the current phase but are currently set at:

• 50p charge for each day an account is overdrawn;

• £20 buffer so that customers can use £20 of the overdraft with no charge;

• charges accumulate over the month and are deducted from the account on the 1st
of the next month; and

• payments will be rejected (if possible) if they would take customers over their
overdraft limit or into overdraft if they hadn’t applied for an overdraft.

Overdrafts
FY16 FY17 FY18

£'000 £'000 £'000

Overdrafts n/a n/a 10

5. LOANS

5.1 Overview

Monzo has been told by some customers that they want the ability to make big purchases
easier to budget for. In response to that feedback, Monzo is planning to launch a fixed-
sum loan product.

This allows customers to take a fixed term loan to cover the cost of designated purchases
and pay the loan back over a reasonable period, for example between 3 and 12 months.

The product differs from other loans on the market in that it is aimed at helping spread the
cost of purchases that have already been made as well as for funding future purchases.
Monzo believes this will be particularly useful for customers who have made a large
purchase which they then wish they hadn’t tied up funds for. The loan product allows
 - 40 -

users to take a loan to cover the amount and pay it back over time, with less impact on
their budget than if they paid it all up-front.

5.2 Target Market and Customer volumes

The product was launched in a "preview" phase in July 2018 with test users. It is aimed
exclusively at existing customers who have made or are planning to make a large
purchase. Customers may apply for the loan after their purchase or leading up to it. If the
customer passes all relevant credit assessments, they are offered the option to spread
the cost via the Monzo App.

The product is expected to be fully rolled out to customers from 2019.

5.3 Business Banking

In response to feedback from customers and community members, in November 2018

Monzo started to explore offering business bank accounts and is currently considering
applying for funding to help support this project.

This is consistent with the Group's mission of making money work for everyone: Monzo
aims to help entrepreneurs, sole traders, freelancers and other small-medium enterprises
by offering them business current accounts that are easy to use, with innovative features
to help them run their activities and manage their finances.

6. THE MONZO MARKETPLACE

6.1 Overview

The Group believes that the banks of the future are those that will let customers connect
with a range of providers and deliver an easy, intuitive, seamless and integrated
experience for customers. In addition to the current account and unsecured consumer
lending products, Monzo will allow its customers from within the Monzo App to access
and control traditional financial products and other elements of their life that impact their
finances. In particular, the long-term vision for the Monzo Marketplace is to provide
access to a number of financial and non-financial providers in each product area, with
each partner providing one or several products within the same market.

Monzo launched a "Beta" version of the Marketplace in March 2018, which included a
number of partnerships with energy switching services and other financial services
companies.

Monzo Marketplace products now include Savings Pots, as further detailed below.

6.2 ISAs

On 16 October 2018, HMRC approved Monzo's application to become an ISA Manager

(the "ISA Approval") to manage the following ISAs: cash ISAs, stocks and shares ISAs,
innovative finance ISAs, cash junior ISAs and stocks and shares junior ISAs. The ISA
Approval is in furtherance of Monzo's marketplace strategy of building Monzo into a
financial centre where customers can manage all of their money and have access to a
choice of products and services from across the market.

6.3 Savings Pot

In October 2018, Monzo started rolling out the Savings Pot. Any money that a customer
adds to a Savings Pot is sent to a Monzo trust account, held with Investec. Customers'
 - 41 -

eligible deposits with Investec are protected up to a total of £85,000 by the FSCS. The
money is held in Monzo's trust account on the customer's behalf meaning that any
interest Investec pay on this, Monzo passes back to its customers. To earn interest,
customers must have at least £1,000 in their Savings Pot at the end of each day.

The Savings Pots are managed through the Monzo App and are flexible, allowing
customers to take money out of their Savings Pot at any time, and have it transferred
back into their Monzo account on the next working day. The Savings Pot is another step
in developing the Monzo Marketplace, allowing customers to access services and
products from a range of providers, all from the Monzo App.

Monzo shall receive a commission equal to 0.15% of the amount available on the
customer Savings Pot.

6.4 Target Market and Customer volumes

The Monzo Marketplace is aimed at providing Monzo customers with access to a range of
third party partners. Integrating these third party services inside the Monzo App, ranging
from energy and utility companies to other financial services, that best suit customers’
needs, is expected to deliver great levels of customer satisfaction.

In terms of the partners chosen by the Group, some of the key criteria for selecting a
partner are as follows:

• shared corporate values and customer centricity – the Group targets providers
who have similar ethics and values;

• a track record in their product area and brand awareness – the Group targets
both traditional financial product providers and fast-growing "fintech" players with
proven business models; and

• strong technical capabilities – the focus is on partners who have well documented
Application Program Interfaces ("APIs") in a modern technical standard to
facilitate integration.

Each partner also goes through a partner due diligence procedure before a binding
commercial agreement is signed.

6.5 Pricing and Revenues

The Monzo Marketplace revenue model is:

• in respect of savings, other non-investment products, and non-platform provider

investment products, based on commissions paid by the partners for the
introduction of a new customer. Such arrangements might be solely linked to the
initial introduction or arranging of the contract between the Monzo customer and
the third party. These arrangements might include remuneration in the form of
revenue sharing with the partner linked to the ongoing provision of the services.
For example, Monzo could receive a set percentage of the annual management
fees charged by an investment provider. Monzo envisages arrangements that
include a mix of the two options; and

• in respect of platform provider retail investment products, based on the receipt of

a fee from the end client who invests via the marketplace. This may be calculated
 - 42 -

on a per-transaction basis or based on the size of the investment, or some other

metric.

Marketplace

FY16 FY17 FY18

£'000 £'000 £'000

Marketplace n/a n/a 5

7. MARKET OVERVIEW

The market for retail deposits in the UK is significant with approximately 97% of adults
holding a personal current account ("PCA") and more than 70 million active PCAs in use,
generating revenues of around £8.7 billion in 2014. There has been a steady uptake of
PCAs in retail banking with 5.6 million new PCAs opened in the UK in 2015. Overdraft use
is also common among PCA holders in the UK. Approximately 45% of PCA customers
use overdrafts to varying degrees, paying total overdraft fees and charges in the region of
£2.9 billion in 2014.

The market remains heavily dominated by the large banks, with multiple products which
they seek to cross-sell to customers. The top four banking groups own over 70% of the
PCA market, and have a combined market share of 60% with respect to all new PCAs
opened in the UK. The incumbent banks are able to maintain control over the retail
banking market due in part to their extensive branch networks, with near to 78% of PCAs
opened in branch.

Over recent years, the landscape has started to change with branch-based challenger
banks such as Metro Bank and digital challenger banks such as Monzo entering the
market. The new entrants typically have the advantage of a lower cost base and more
nimble systems designed around an improved user experience.

With the recent regulatory changes brought about by both Open Banking and PSD2
(discussed in more detail at paragraphs 3.11 and 3.12 of Part II of this document), the
retail banking market should continue to evolve and offer greater opportunities to
challengers such as Monzo.

(Source for figures: CMA Retail Banking Market Investigation - Final Report, August 2016)

8. CUSTOMER SERVICE

Monzo's primary interface with customers is via the smartphone but a core part of its
strategy is for customers to have great customer service and to feel they are dealing with
real people. It seeks to achieve this through in-app chat.

Monzo has put its customer community at the heart of its business, using a community
forum to suggest features, test the Monzo App and give Monzo constant feedback so it
can build something that matches customer demand.

9. MONZO CORPORATE HISTORY

Monzo was founded in 2015 by Tom Blomfield (now Chief Executive Officer), Gary
Dolman, Jonas Huckestein, Paul Rippon (now deputy Chief Executive Officer) and Jason
Bates (who left Monzo in 2015). The Founders' vision was to develop a fundamentally
 - 43 -

different kind of bank that lived on smartphones, helped customers manage their day-to-
day finances and was optimised for the way we live today. Monzo, operating under the
name 'Mondo' at the time, launched its prepaid card in 2015. By December 2015, 20,000
people had signed up for prepaid cards.

In August 2016, Monzo received PRA authorisation and was granted a UK banking
licence with restrictions. It is regulated by both the FCA and PRA. The restricted licence
was an opportunity for Monzo to test its systems with live payment networks before fully
launching to the public. Restrictions on the UK banking licence were lifted by the PRA in
April 2017. As a fully authorised, unrestricted, bank Monzo began transitioning users from
prepaid cards to Monzo current accounts and debit cards.

Monzo changed its name in August 2016 from 'Mondo' to 'Monzo'. The new name was
chosen by reaching out to Monzo's community of users. Operating under its new name,
Monzo continued to expand. In January 2017, Monzo reached 100,000 customers. By
May 2017 this had doubled to 200,000 customers who had collectively spent £250 million
through Monzo prepaid cards. Monzo now has over 1,000,000 customers who have
activated their accounts and have collectively spent over £4 billion through the Monzo
App.

In March 2018, Monzo made overdrafts available to existing customers pending a

creditworthiness review and in April 2018 ended its prepaid programme having moved
nearly 95% of its prepaid Active Customers to the current account. In May 2018, Monzo
added Apple Pay to its current account. In June 2018, Monzo integrated UK cross-border
money transfer company, TransferWise, into the Monzo App, which will allow its
customers to send international transfers in 16 currencies. In August 2018, Monzo made
its current accounts available to anyone in the UK aged 16-17. Overall, the net cost of
serving an account has reduced with Monzo now Contribution Margin positive, compared
to the prepaid scheme, which incurred marginal losses of around £65 per Active
Customer per year.

Monzo has completed several rounds of funding since it was founded, with early stage
investments from investors such as Passion Capital and Thrive. Monzo has also
completed three crowdfunding rounds, including the fastest crowdfunding in history,
raising £1 million in 96 seconds at more than £10,000 per second, in March 2016. In its
fundraising round in November 2017, Monzo raised around £59 million with Goodwater
Capital, Stripe, Thrive, Passion Capital, Orange Digital Ventures, the Kevin Systrom
Revocable Trust and Michael Moritz. Monzo's latest fundraising round, which was led by
General Catalyst with participation from Accel, raised £85 million.

10. GROUP STRUCTURE

As at the Latest Practicable Date, Monzo has one subsidiary: Monzo Support US, a
Delaware corporation, which was incorporated under the laws of Delaware in the United
States on 18 September 2018. Once it becomes fully operational, it is intended that
Monzo Support US will provide overnight customer support services to UK customers.

Monzo has no joint ventures, or associates.

11. THE GROUP 'S STRATEGY

The Group intends to pursue the following strategy:

Profitability
 - 44 -

As Monzo is now Contribution Margin positive, the next financial goal is to reach overall
profitability as a business in the future; this will be achieved when all revenue generated is
greater than the total of all marginal costs and overheads. To work towards profitability,
the Group will do the following things:

• the Group will work to increase the productivity and scalability of providing
customer support, while maintaining a high quality of service. The Group will do
that by helping its staff work more effectively with better tools and automation. It
will work to reduce the number of questions coming in by continuing to develop a
smarter help screen that lets customers find their own answers faster;

• Monzo will also work to generate revenue through lending. Monzo started making
overdrafts available to existing customers in March 2018 pending a
creditworthiness review, and over 100,000 people have now enabled them. Over
the next few months, Monzo will build new features that let people borrow in ways
that are convenient, transparent and affordable;

• the Group will also generate revenue from the Monzo Marketplace. The Monzo
Marketplace will allow customers access to third parties who provide a variety of
products and services, including energy switching services, insurance plans and
savings, investment products, mortgages, credit cards and loans;

• the Group will keep working to make sure it is reliable and equipped with
everything its customers need to manage their money. At the end of May 2018
Monzo published a list of all the basic but essential features that Monzo was still
missing: https://monzo.com/blog/2018/05/22/making-monzo-better/. Monzo has
been working through that list at pace, keeping track of its progress by ticking
things off and sharing live updates with the Monzo community #@MakingMonzo;
and

• Monzo has experienced strong growth in the past and will continue to focus on
growth in the future. More than 2,000 new people open Monzo accounts every
day. Monzo believes it will increase growth by adding product features with real
network effects, that help people use Monzo together.

Social Mission

Monzo was founded on the basis of, and continues to be driven by, a strong social
mission to 'make money work for everyone'. Monzo is focussed on making banking
products transparent, simple to use, and accessible to as many people as possible:

• Monzo aims to ensure visibility on fees that it charges and to avoid punitive fees,
which many other banks charge, which hit when customers are most vulnerable.
Monzo will work to show customers exactly what they can expect to pay for an
overdraft, and give them instant insight and control over where and how they
spend their money;

• Monzo aims to continue to engage with customers when developing new

products. For example, Monzo will aim to give versions of new products to
thousands of people and invite them to join in, provide feedback and comments
on Monzo's approach, and suggest things it can do better. Monzo firmly believes
this approach helps it to build better products;
 - 45 -

• Monzo will work to help financially excluded customers access bank accounts
through Monzo and aims to continue to support vulnerable customers by
developing an empathetic approach to debt management; and

• Monzo will aim to improve financial literacy amongst its customers through clear
communications and by providing educational contents on its website.

Expansion

By the end of 2019, the Group's goal is that several million people in the UK will be using
Monzo.

The Group also plans to expand into new geographies. In February 2018, Monzo
completed passporting to the Republic of Ireland; Monzo is not currently offering any
products in Europe. The Group is considering expansion plans into Europe, but does not
currently anticipate opening any European subsidiaries until the second half of 2019 at
the earliest.

The Group incorporated a non-banking subsidiary, Monzo Support US, under the laws of
Delaware in the United States on 18 September 2018. Once it becomes fully operational,
it is intended that Monzo Support US will provide overnight customer support services to
UK customers. The Group is exploring the United States market for future expansion and
has had communications with US regulators about acquiring a licence.

12. PRINCIPAL INVESTMENTS

Other than Monzo Support US, Monzo holds no shares in any other company, has no
other investments (completed or in progress) and has made no firm commitments in
respect of future investments.

13. THE GROUP’S DEBT FACILITIES

The Group does not have any debt facilities. It finances its activities through the issue of
ordinary shares and through cash deposits.
 - 46 -

PART II
REGULATION

This section provides a description of the legal and regulatory environment as it applies to the
Group. As well as the following general descriptions, attention is drawn to the section headed
"Risk Factors" on pages 12 to 24 of this document which describes specific risks associated with
the operations of Monzo.

1. REGULATORY FRAMEWORK

The UK retail banking market is a highly regulated environment and one which is
undergoing constant development. Monzo is authorised by the Prudential Regulation
Authority (the "PRA") and is regulated by both the PRA and the Financial Conduct
Authority (the "FCA"). It received its full authorisation on 10 August 2016 and had its
banking licence restrictions lifted on the 5 April 2017.

Monzo has full authorisation under articles 5, 14, 25(1), 25(2), 25A(1), 25A(2), 36A, 39E,
60B(1), 60B(2) and 64 of the Regulated Activities Order to conduct the following activities:

• accepting deposits;

• agreeing to carry on a regulated activity;

• arranging (bringing about) deals in investments;

• arranging (bringing about) regulated mortgage contracts;

• credit broking;

• dealing in investments as principal;

• debt-counselling;

• entering into a regulated credit agreement as lender;

• exercising lender's rights and duties under a regulated credit agreement;

• making arrangements with a view to regulated mortgage contracts; and

• making arrangements with a view to transactions in investments.

It must comply with the rules and regulations issued by both the PRA and the FCA,
including those set out in the PRA Rulebook and the FCA Handbook. These include
specific rules relating to prudential capital and liquidity requirements, and regulatory
action in the event of bank failure, as well as conduct of business rules (in particular,
around disclosure and promotions) and general principles of business, including the
requirement to treat customers fairly and to communicate information to them in a way
which is fair, clear and not misleading.

It must also comply with the requirements of various pieces of legislation that impact the
business.
 - 47 -

2. REGULATORS

Under the Financial Services and Markets Act 2000 ("FSMA"), the PRA and FCA share
overall responsibility (including supervision, enforcement, and rule-making and regulatory
policy) for:

• authorisation;

• prudential matters; and

• conduct of business.

The FSMA also sets out the regulatory objectives for each regulator.

The PRA's primary objective is to promote the safety and soundness of those institutions
authorised by the PRA by seeking to make sure that their business is carried on in a way
which avoids any adverse effect on the stability of the UK financial system. Its secondary
objective is facilitating effective competition in the markets for services provided by those
institutions.

The FCA is responsible for securing an appropriate degree of protection for UK

consumers protecting and enhancing the integrity of the UK financial system and
promoting effective completion in the interests of consumers.

Other relevant authorities include:

(a) Payment Services Regulator. A regulator with responsibility for oversight of retail
payment systems (including Bacs, CHAPs, Visa and Mastercard);

(b) Financial Ombudsman Service. The FOS has statutory responsibility for
handling complaints from retail banking customers dissatisfied with banking and
other service providers and for providing redress where due. The FOS operates
independently from the other authorities but needs to maintain a memorandum of
understanding with the FCA;

(c) Financial Services Compensation Scheme (FSCS). This body is responsible for
ensuring that compensation is paid to insured depositors and other eligible
claimants to cover amounts due from failed banks and in other appropriate cases.
The FSCS is independent from, but accountable to, both the FCA and the PRA;
and

(d) European Banking Authority (EBA). The EBA has EU-wide oversight; its role
includes securing compliance with European banking legislation and
strengthening international co-ordination among national supervisors.

3. REGULATORY CHANGE: TRENDS AND OUTLOOK

3.1 FCA’s consultation in relation to "Assessing creditworthiness in consumer credit"

proposals (July 2018)

In July 2018, the FCA published its changes to rules and guidance on assessing
creditworthiness in consumer credit. In particular, the FCA clarified the distinction
between affordability and credit risk, stating that the former focuses on the risk to the
lender of the customer not making repayments, whilst the latter focuses on the effects on
the customer of not making repayments. The FCA also clarified that, although the rules
set out that the creditworthiness assessment is based on two separate assessments,
 - 48 -

firms are not required to carry out two separate processes as long as their single process
sufficiently addresses affordability.

3.2 FCA Mission: Our Future Approach to Customers (updated July 2018)

The FCA published its Mission in April 2017, which explained how and why the FCA
prioritises work, protects and intervenes in financial markets. This was the first in a
planned series of publications. In November 2017, the FCA published its Approach to
Consumers document, which sets out and consults on the FCA's approach to regulating
for retail consumers. The document describes the FCA's views on what a well-functioning
market looks like for consumers, and helps to explain how the FCA will diagnose and
remedy actual and potential harm. Based on this consultation document, the FCA
published its final Approach to Consumers in July 2018. The Approach to Consumers sets
out the FCA's vision for well-functioning markets and explains how the FCA will use its
resources to protect consumers. The final document confirms the core principles
supporting the FCA's approach, the key outcomes it expects to see and the three key
themes for delivery of these outcomes: regulating for the real world, regulating for
vulnerable and excluded customers, and regulating for the future.

3.3 FCA's strategic review of the retail banking business models (launched April 2017,
updated June 2018)

In April 2017, the FCA launched its review of business models used in the retail banking
sector. The purpose of the review is to identify areas of concern in relation to competition
or conduct that could warrant more investigation or intervention. In October 2017, the
FCA published details of the scope of the review. It noted that, in phase 1 of the review, it
will focus on reviewing existing retail banking business models and the relevant markets
from a supply side perspective. In phase 2, the FCA will assess the impacts of changes in
economic, technological, social and regulatory factors on the relevant business models to
help identify risks to the FCA's competition and conduct objectives. The review will
encompass all types of consumer products such as current accounts, cash savings,
mortgages, secured and unsecured lending, credit cards and general insurance
distribution.

The FCA provided an update on this, in June 2018, stating that its early analysis indicates
that a key component of competitive advantage for incumbent banks to date has been the
combination of personal current accounts and large branch networks. This has allowed
these banks to benefit from a funding cost advantage, significant additional income from
fees and charges and the ability to cross-sell. It also indicated that it was still concerned
that unarranged overdraft charges are more likely to be incurred by vulnerable customers
and the findings would help guide their proposals set out under the overdraft consultation
discussed below. The FCA now plans to move to phase 2 of the review by exploring the
impact of future change scenarios on business models and consumers

3.4 FCA's consultation in relation to "High-cost Credit Review: Overdrafts" (May 2018)

The FCA has published proposals for consultation relating to arranged and unarranged
overdrafts, along with a discussion on changes to overdraft charges (including a proposed
ban on fixed fees). The consultation relates to FCA measures around overdrafts to
address low customer engagement, promote competition and improve transparency for
customers. The discussion element of the consultation paper relates to potential
measures to tackle the identified issues of complex price structures, high level of fees and
repeat use. A ban on certain terminology is also proposed to make sure arranged
overdrafts are presented as debt. The FCA plans to finalise rules towards the end of the
year, and to give more analysis on pricing interventions and repeat overdraft use. Monzo
 - 49 -

has provided a response to the FCA consultation setting out its views on some of the
proposed measures and explaining its approach to overdrafts.

3.5 FCA's Approach to supervision and enforcement (March 2018)

In March 2018, the FCA launched a consultation on its increasingly forward-looking and
pre-emptive approach to supervision of firms. The consultation sets out the FCA's role in
maintaining fair and honest markets, why and how the FCA prioritises supervision and
how it carries out its supervision. Alongside its paper on supervision, the FCA also
consulted on its approach to enforcement in March 2018. The purpose of this second
consultation is to ensure the FCA carries out investigations consistently and in an open-
minded manner. The FCA emphasises that decisions on enforcement action are made
according to whether there has been serious misconduct, intent to do wrong, a failure to
act on feedback, or negligence or recklessness. Both consultation papers closed on 21
June 2018, and final documents are intended to be published in winter 2018.

3.6 FCA's retail banking product governance review (March 2018)

In March 2018, the FCA published the outcome of its review of product governance in
small and medium-sized retail banks. The review focused on how firms’ product
governance frameworks helped them to identify and manage the ongoing conduct risks of
their products. In relation to areas for improvement, the FCA found that some firms
needed to strengthen their product review processes to make sure that they acted on
identified lessons or risks, for example by recording the outcome of product reviews more
clearly.

3.7 PRA statement on consumer credit (January 2018)

In tandem with the focus of the Financial Policy Committee of the Bank of England on
consumer credit, the PRA conducted a review and concluded that "the resilience of
consumer credit portfolios is reducing". In July 2017, the PRA asked all firms with material
exposures to consumer credit to give evidence demonstrating that the specific risk and
concerns are addressed. On the back of this, the PRA communicated its key findings and
set out points for firms to action in its follow-up letter to the Statement, published in
January 2018.

The PRA's main findings include those related to: weaknesses in management
information and governance; medium-term economic downturn risk; and affordability
assessments. On affordability assessments, the PRA expects that where it is not obvious
that a customer can repay in an affordable manner, firms will take account of income and
expenditure, such as comparing net disposable income against monthly payments and
considering the customer’s total indebtedness.

3.8 FCA Policy Statement on remuneration in CRD IV firms (May 2017)

In May 2017, the FCA published a Policy Statement with final rules and guidance on
remuneration policies and practices. The Policy Statement applies to all firms that fall
within the scope of the Capital Requirements Directive ("CRD IV"). The FCA has aligned
its provisions with the European Banking Authority's guidelines. The new requirements
aim to make sure there is consistency across remuneration policies and are intended to
promote sound and effective management without providing excessive risk taking.
 - 50 -

3.9 PRA's supervisory statement on remuneration (April 2017)

In April 2017, the PRA published a supervisory statement on remuneration, which is

relevant to all firms regulated by the PRA which fall within the scope of the Remuneration
Part of the PRA Rulebook. The supervisory statement sets out the PRA's expectations in
relation to a number of issues relating to remuneration such as: proportionality; material
risk takers (MRTs); application of malus and clawback to variable remuneration;
governing body/remuneration committees; and remuneration and capital. The PRA's
Remuneration Part implements relevant provisions from CRD IV and from the European
Banking Authority's Guidelines on remuneration.

3.10 Competition and Markets Authority’s retail banking market investigation (August
2016)

The final report published by the Competition and Markets Authority ("CMA") concluded
that established banks do not have to compete hard enough for customers’ business,
while newer entrants are finding it more difficult to grow. The CMA expressed views that
consumers are paying more than they should and new services are being restricted.

One of the main remedies implemented by the CMA was to create the Open Banking
initiative. Measures are being implemented across the retail banking, payments and
consumer credit sectors to open up the market and enhance transparency. The industry
and government are collaborating to deliver open access to data through the use of APIs.
These reforms will dovetail with the EU’s revised Payment Services Directive (PSD2) and
will allow third-party access to account-level data and payment functionality.

This should let individuals search for deals and products that better match their personal
usage patterns and needs. The Open Banking initiative will help to inform development of
the Monzo Marketplace which will be one of the key customer engagement drivers.

3.11 Open Banking

Open Banking is a regulatory initiative aimed at increasing openness and competition in

retail and SME banking. In August 2016, the CMA issued a ruling requiring that the nine
largest UK banks were to allow data sharing through standardised APIs. Open Banking is
one element of a series of regulatory initiatives consisting of three components: CMA
remedies (including Open Banking APIs), PSD2 (see below) and the GDPR. Together,
they are expected to have a significant impact on the retail and SME banking market.

The Open Banking standards have now been expanded to cover all payment account
types covered by PSD2 so that they can be used to comply with PSD2 requirements. It is
expected that Open Banking APIs will benefit challengers, such as Monzo, and others
across the industry by allowing them standardised, authorised access to transactional
data as well as payment functionality. This can allow lenders to improve risk models, offer
more tailored high-engagement products, and permit easier comparison to encourage
product uptake.

These changes should lead to benefits for both retail and small business customers by
opening the way to new products and services that could help customers get a better
deal, gain a more detailed understanding of their accounts, and help them find new ways
to make the most of their money. Customers will also be able to initiate payments to third
parties. These third party providers will have to be FCA authorised under the new
Payment Services Regulations 2017 (see below regarding PSD2).
 - 51 -

3.12 Second Payment Services Directive (PSD2)

PSD2 entered into force on 13 January 2018, replacing and updating the previous
Payment Services Directive. It was introduced by the European Commission to address
concerns about how payment services operated for consumers and to encourage
innovation and competition, and entered into UK law via the updated Payment Services
Regulations 2017.

Together with the Open Banking initiative, this is expected to have a significant impact on
competition in the banking market and the Monzo Marketplace features are being
developed to take advantage of this access.
 - 52 -

PART III
CAPITAL RESOURCES AND OPERATING AND FINANCIAL REVIEW OF THE GROUP

Part A: Capital Resources

The Group's principal sources of liquidity include proceeds from fundraising activities and
customer deposits. As at September 2018, the Group had a net cash position of £287 million.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The Group's contractual obligations and commitments primarily include operating leases and loan
commitments to customers. The following table summarises the Group's contractual obligations
as of 28 February 2018:

Total Within 1 year 1 to 5 years Over 5 years

£000 £000 £000 £000

Operating lease 1,530 651 879 0

obligations

Customer overdraft 723 723 n/a n/a

but undrawn facilities

Loan commitments n/a n/a n/a n/a

Following the end of FY2018, Monzo entered into a lease for a new office located at 38 Finsbury
Square and 31, 33 and 35 Wilson Street, London, England, EC2A 1PX. The lease has a term of
25.5 months, with an annual rent of approximately £1.3 million and a free rent period of 6 months.
 - 53 -

Part B: Operating and Financial Review

The following is a discussion of Monzo’s financial condition and results of operations for the
audited financial statements and related notes for Monzo for the year ended 28 February 2018
and for the year ended 28 February 2017. This discussion should be read in conjunction with Part
IV of this document. The audited financial statements and related notes for Monzo for the audited
financial statements and related notes for Monzo for the year ended 28 February 2018 and for the
year ended 28 February 2017, which have been prepared in accordance with IFRS as adopted by
the EU.

The following discussion and elsewhere in this document includes forward-looking statements
that reflect Monzo’s plans, estimates and beliefs, and involve risks and uncertainties. Actual
results and the timing of events could differ materially from those expressed or implied by such
forward looking statements as a result of various factors, particularly those discussed in the
section entitled "Risk Factors" and the paragraph relating to forward-looking statements in the
section entitled "Important Information".

1. OVERVIEW

Monzo was launched in February 2015 with the Founders' aim being to build "the bank of
the future". It is a digital challenger bank, accessed through a smartphone app and has no
branch network. Monzo's philosophy has been to focus on making something people
want. The Board believes people are tired of the traditional banking model, tired of hidden
fees and charges, endless paper forms, and nothing quite working in the way they would
expect. Now, over 1,000,000 people have an activated account with Monzo and more
than 2,000 join every day.

During FY2017, Monzo released its prepaid programme app and ran the fastest
crowdfund in history: people pledged £1 million in just 96 seconds.

During FY2018, the PRA granted Monzo its unrestricted UK banking licence. In July 2017,
Monzo started trialling current accounts and by Q4 2017 was rolling out current accounts.

As at April 2018, Monzo had migrated nearly 95% of its prepaid Active Customers to
current accounts after phasing-out its prepaid accounts programme. Monzo has also
grown its customer base organically, primarily due to word of mouth. Moreover, Monzo
began offering lending products in 2018 and trialling a marketplace concept (more detail
in paragraph 6 of Part I of this document), and continues to move towards expanding its
operations globally, including incorporating a wholly owned non-bank subsidiary in the
United States in September 2018.

The Board also believes that Monzo has maintained, and continues to maintain, an
adequately capitalised balance sheet, through active fundraising as discussed in further
detail below:

• April & August 2015: Seed round of approximately £2 million with Passion Capital

• March 2016: Equity crowdfunding round of approximately £1 million with

Crowdcube

• April 2016: Series A fundraising round of approximately £5 million with Passion

Capital
 - 54 -

• October 2016: Series B fundraising round of approximately £4.8 million with

Passion Capital

• February, May & July 2017: Series C fundraising round of approximately £19.64
million with Thrive, Passion Capital, Orange Digital Ventures, Tom Odell and the
Kevin Systrom Revocable Trust

• April 2017: Equity crowdfunding round of approximately £2.5 million with

Crowdcube

• November & December 2017: Series D fundraising round of approximately £59

million with Goodwater Capital, Stripe, Thrive, Passion Capital, Orange Digital
Ventures, the Kevin Systrom Revocable Trust and Michael Moritz

• December 2017: Equity crowdfunding round of approximately £878,000 with

Crowdcube

• October 2018: Series E fundraising round of £85 million with General Catalyst,
Accel, Stripe, Goodwater Capital, Thrive, Orange Digital Ventures, the Kevin
Systrom Revocable Trust, among others.

2. RESULTS OF OPERATIONS

Selected Statement of Comprehensive Income Information

The following table sets out Monzo's revenue, operating profit and profit after tax for the
year ended 28 February 2017 and the year ended 28 February 2018. Please see pages
13 and 23 of Monzo's Annual Reports for FY2017 and FY2018, respectively, for its
audited statement of comprehensive income.

Years ended 28 February

2017 2018

(in thousands of £)

Revenue 120 1,814

Operating Loss (8,047) (34,890)

Tax 1,238 2,530

Loss after Tax 6,689 30,546

Monzo's revenue grew over 1,500% between FY2017 to FY2018, largely due to growth in
the prepaid programme in FY2017 and the subsequent migration of these customers to
current accounts in second half of FY2018. To support this revenue growth, Monzo's
expenses have also grown significantly, with Losses after Tax increasing by over 450% in
FY2018 compared to FY2017. This increase in Losses after Tax was primarily driven by
hiring additional staff to support growth and future business expansion, and technology
and premises costs. This increase, however, was partially offset by management's efforts
to improve operational efficiencies, setting up a scalable operations department to
address Monzo's 200% growth in customer numbers in FY2018 and phasing-out of
Monzo's prepaid programme over the course of FY2018.
 - 55 -

Balance Sheet

Please see pages 14 and 24 of Monzo's Annual Reports for FY2017 and FY2018,
respectively, for its audited statement of financial position.

Cash Flow

Please see pages 16 and 26 of Monzo's Annual Reports for FY2017 and FY2018,
respectively, for its audited statement of cash flows.

3. CRITICAL ACCOUNTING POLICIES

Please see pages 17 and 28 of Monzo's Annual Reports for FY2017 and FY2018,
respectively, for a discussion of its critical accounting policies in the section entitled
"Notes to the financial statements".

4. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Please see pages 20 and 44 of Monzo's Annual Reports for FY2017 and FY2018,
respectively, for a discussion of its qualitative and quantitative disclosure about market
risk in the section entitled "Notes to the financial statements".
 - 56 -

PART IV
FINANCIAL INFORMATION OF MONZO

Section A: Audited Financial Information of Monzo for the year ended 28 February 2017
and the year ended 28 February 2018

Introduction

Audited historical information for Monzo, covering the latest two financial years, has been
prepared under International Financial Reporting Standards as adopted by the EU.

Audited accounts

Monzo’s audited accounts for FY2017 and FY 2018 are available on its website, here:

1. FY2017 annual report: https://monzo.com/annual-report/2017/

2. FY2018 annual report: https://monzo.com/annual-report/2018/

 - 57 -

Section B: Independent auditors' reports on the Audited Financial Information of Monzo

for the year ended 28 February 2018 and the year ended 28 February 2017

A. Independent auditors' report for FY2018

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MONZO BANK LIMITED

Opinion
We have audited the financial statements of the Company for the year ended 28 February 2018
which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flows and the related notes 1 to 28,
including a summary of significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.

In our opinion, the financial statements:

• give a true and fair view of the Company’s affairs as at 28 February 2018 and of its loss for
the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union;
and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements section of our report below. We
are independent of the Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
public interest entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK)
require us to report to you where:

• the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material
uncertainties that may cast significant doubt about the Company’s ability to continue to adopt
the going concern basis of accounting for a period of at least twelve months from the date
when the financial statements are authorised for issue.
 - 58 -

Overview of our audit approach

Key audit • Overdraft recoverability
matters • Improper revenue recognition
• Risk of management override
• Incomplete / inaccurate transfer of assets from a third party to the
Company

Materiality • Overall materiality of £600k which represents 1% of equity

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current year and include the most significant
assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.

Risk Overdraft recoverability (2018 £12k, 2017 £0)

Overdrafts are a new product for the Company. There is

currently limited historic information showing the repayment
profile of the customer base and this therefore impacts the
valuation of the asset. An impairment may be required over the
asset if it is not deemed fully recoverable.

Given the nature of the product and the client base of the
Company, we have considered there to be a risk of
recoverability over the overdrawn balances – which translates
into a risk of overstatement of the net overdraft asset.

This is a new risk for the current year audit as this is the first
year the Company will have an overdraft product on the balance
sheet.

Our response to the All controls existing around the processes that drive the
risk impairment provision are heavily reliant on the completeness
and accuracy of reports generated by the core banking platform
at the Bank. Due to these controls being implemented for part of
the year under audit, we are unable to place reliance on them for
the full year. We have therefore adopted a substantive testing
audit approach.

We, along with our specialists, have reviewed the accounting

policy documentation and assessed whether management’s
process to identify impairment is sufficiently robust and
compliant with the underlying accounting guidance (as
prescribed in International Accounting Standard 39).

We performed the following procedures during our audit:

• Engaged our credit risk management specialists to review

management’s approach to calculating the impairment
provision, to ensure it is in line with the International
Financial Reporting Standards (IFRS), through the
 - 59 -

adoption of IAS 39, and assess the reasonableness of the

key assumptions i.e., Probability of Default (PD) and Loss
Given Default (LGD) used to determine the impairment
provision.

• Validated where possible the key PD and LGD inputs, in

our work performed as noted above.

• Corroborated the conclusions reached by our specialists,

by performing a review on the portfolio in light of the
observations noted by the specialists and verifying the
materiality of the observations on the year end provision.

• Engaged our specialists to perform a sensitivity analysis

on the following assumptions, to establish a range of
expected losses:

o Non-marginal customers

o LGD

o Emergence Period

o PD

o Treatment of unauthorised overdrafts

Key observations Our validation of key inputs to the impairment calculation model
communicated to the revealed that data flows to the underlying model were materially
Audit Committee complete and accurate.
The impairment model assumptions and methodology were
found to be appropriate.
Our procedures around stress testing and sensitivity analysis of
key inputs did not reveal any material errors over the calculated
provision.
Based on our work performed, we have concluded that the
impairment provision in respect of overdrafts is materially correct
as at 28 February 2018.

Risk Improper revenue recognition (2018 £2,041k, 2017 £112k)

We reviewed the revenue streams earned by the Company, and

assessed which of these could give rise to a material error in the
financial statements. We determined that Interchange fees were
a significant risk based on size and complexity around recording
transaction volumes which determine Interchange revenues.

This is a new risk for the current year’s audit as this is the first
year the income has become material.
 - 60 -

Our response to the The key risk for us is the recording of Interchange fee in the
risk incorrect period.

As noted above, due to the controls not having operated for the
full year of audit and the resulting lack of maturity in the control
environment, we adopted a substantive testing audit approach
which included increased sample sizes and substantiation
across the population to gain assurance.

To address the identified risk, we performed the following audit

procedures:

• Reviewed the Company’s accounting policy around

revenue recognition.

• Vouched the Interchange fees earned on Prepaid Card

transactions to third party statements and obtained direct
confirmation from the third party on the Interchange fees
payable to the Company for the year under audit.

• Vouched the Interchange fees earned on current

account transactions to third party statements.

• Vouched Interchange fees to cash.

Key observations We are satisfied that the Company has recorded revenue in line
communicated to the with its accounting policy.
Audit Committee
Based on our work performed we can conclude that the
Company has recorded and recognised Interchange revenue
appropriately and in the year under audit.

Risk Risk of management override

International Auditing Standards (UK & Ireland) mandate the

consideration of management override of internal controls as a
fraud risk on all audits.

The susceptibility of an accounting estimate to management bias

increases with the subjectivity involved in making it. As part of
our response to the risks of material misstatement involving
management (i.e., the risk of management override), we review
significant accounting estimates for evidence of management
bias. We remain alert to the possibility that management’s
involvement in the preparation of the financial statements, and
its responsibility for the judgments and assumptions relating to
significant estimates, increases the risk of material misstatement
due to fraud.

Our risk assessment incorporated specific consideration of

significant transactions and estimates, including:

• Judgements applied by management in the valuation of

share based payments;

• Judgements applied in the calculation of the R&D tax

 - 61 -

credit claim; and

• An assessment for evidence of fraudulent activity in

journals posted throughout the year

Our response to the As previously noted, due to the controls not having operated for
risk the full year of audit and the resulting lack of maturity in the
control environment, we adopted a substantive testing audit
approach which included increased sample sizes and
substantiation across the population to gain assurance.

In each area where we identified an associated risk of

management override, we performed the following audit
procedures:

Share based payments

• Agreed the completeness of share based payments to

underlying employee contracts;

• Engaged our specialists to:

o Test the completeness of the parameters in the call

option pricing model.

o Review the appropriateness of existing valuation

model.

o Test the reasonableness of the risk free rate and

volatility parameters as these are two parameters
which are outside of the model market trends.

o Recalculate the FV for all new options granted during

the year under audit.

o Review the financial statement disclosures

R&D tax credit claim

• Engaged with our specialists to:

o Discuss with management the basis of their R&D tax

credit claim for both 2017 and 2018 year ends (both
periods). Management informed us that they had
engaged with their tax specialists to advise them on
the R&D tax credit claim.

o Obtain management’s R&D tax credit calculation for

both periods.

o Obtain and reviewed the report from management’s

tax specialists on the R&D tax credit claim for both
periods.
 - 62 -

o Review HMRC correspondence with the Bank and

discuss with management the basis of discussions
that they had with HMRC.

o Review management’s responses to HMRC’s

enquiries.

o Assess the inputs to the R&D tax credit calculation

and challenge any which are subjective or at risk of
challenge from HMRC.

o Review the provision management had recorded

against the tax claim as a result of ongoing HMRC
enquiries.

• Agreed the expenses included in the R&D tax credit claim

to the income statements; and

• Reviewed the tax disclosures in the financial statements to

the underlying calculations.

Journals with higher risk characteristics

As a standard procedure in response to the risk of management

override we completed our journal entry testing for the year
under audit. This testing focused on significant or unusual
journals, focusing on significant risk areas, journals posted
around key estimates and any topside adjustments using data
analytics.

Key observations share based payments

communicated to the
Audit Committee Based on our work performed, we have concluded that the Bank
has appropriately valued the share based payments as at the
year end date, using the Black Scholes option pricing model.

R&D tax credit claim

Our specialists performed an analysis to establish a reasonable

range of estimates resulting in a provision which we believe is
reasonable. The range was determined based on our
understanding of the management’s claim, our review of their
responses to HMRC queries, and our industry knowledge. We
reviewed management’s claim within this range.

Based on this work performed and our assessment of the

provision that management has recorded, we believe that the
amount of the provision recorded against their claim is
reasonable at the year end.

Journals with higher risk characteristics

We did not identify any unusual journals from the testing

performed.
 - 63 -

Risk Incomplete and / or inaccurate transfer of assets from third party

systems to the core banking system at the Company (2018
£26.4m, 2017 £0)

During the year, the Company migrated the majority of its

existing prepaid card customers, previously maintained by a third
party (the Prepaid Third Party), to its in-house core banking
system. There is a risk of inaccurate or incomplete transfer of
key customer data during the migration process, which took
place in phases.

Our response to the To address the identified risk, we performed the following audit
risk procedures:

• Reconciled the net transactional movement on the

banking ledger to third party settlement statements for a
sample of days, in order to determine the completeness of
customer data on the Prepaid Third Party systems pre-
migration.

• Traced the balances migrated from the Prepaid Third

Party to cash amounts transferred by the Prepaid Third
Party in relation to the previous pre-paid card customers
now transferred to current accounts.

• Obtained confirmation of amounts owed by the Prepaid

Third Party in respect of customers who had been
transferred but where cash had not yet been received in
relation to the transfers.

• Obtained post migration reports from the Prepaid Third

Party to ensure the discontinuation of pre-paid card
customer activity post-migration.

• Reviewed management’s reconciliation, as at 30 April

2018, of the remaining net settlement due from the
Prepaid Third Party to confirm that there was no expected
liability for Monzo to extinguish with the Prepaid Third
Party as a result of the termination of the pre-paid card
program post year end.

• Circulated confirmations to a random sample of individual

customers, to confirm the accuracy of balance(s) held by
them with the Company as per their records. Where we
did not receive a response on our confirmation request,
we performed alternative procedures by verifying accuracy
of the customer balance as per the Company’s systems
and the statements communicated by the Company to
their customers.

Key observations The balances recorded in the financial statements as receivable

communicated to the due from the Prepaid Third Party as at the year end in respect of
 - 64 -

Audit Committee migrated account balances are complete and accurate.

We note from our review of post migration activity reports from,

and communication with, the Prepaid Third Party that migrated
customer balances are no longer managed by the Prepaid Third
Party.

Our confirmation procedures, and alternative procedures for

non-responses, provided assurance over the accuracy of
migrated customer balances, with no exceptions noted.

Based on our work performed, the Company has migrated

customer balances completely and accurately from the Prepaid
Third Party to its core Banking system.

An overview of the scope of our audit

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance
materiality determine our audit scope for the Company. This enables us to form an opinion on the
financial statements. We take into account size, risk profile, the organisation of the Company and
effectiveness of controls, including controls and changes in the business environment when
assessing the level of work to be performed. All audit work was performed directly by the audit
engagement team.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect
of identified misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could

reasonably be expected to influence the economic decisions of the users of the financial
statements. Materiality provides a basis for determining the nature and extent of our audit
procedures.

We determined materiality for the Company to be £600k (2017: £132k), which is 1% of equity
(2017: 2% of admin expenses). We believe that equity provides us the appropriate magnitude on
which an omission or misstatement that, individually or in the aggregate, in light of the
surrounding circumstances, would reasonably be expected to influence the economic decisions of
the users of the financial statements. The change from administrative expenses compared to prior
year is due to the progress made by the Company and thereby changes in the focus of the users
of financial statement.

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to
reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality.
 - 65 -

On the basis of our risk assessments, together with our assessment of the Company’s overall
control environment, we have set performance materiality at 50% (2017: 50%) of our planning
materiality, equating to £300k (2017: £66k). The ongoing development of new products and
internal processes has also contributed to our assessment of setting performance materiality at
this level.

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We have reported to the directors all uncorrected audit differences in excess of £30k (2017: £6k),
which is set at 5% (2017: 5%) of planning materiality, as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative considerations in forming our opinion.

Other information

The other information comprises the information included in the annual report set out on pages 1
to 12, other than the financial statements and our auditor’s report thereon. The directors are
responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in this report, we do not express any form of assurance
conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of the other information, we
are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
• the strategic report and directors’ report have been prepared in accordance with applicable
legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in
the course of the audit, we have not identified material misstatements in the strategic report or
directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept; or

 - 66 -

• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 12, the
directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud

The objectives of our audit:

• in respect to fraud, are; to identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the
assessed risks of material misstatement due to fraud, through designing and implementing
appropriate responses; and to respond appropriately to fraud or suspected fraud identified
during the audit. However, the primary responsibility for the prevention and detection of fraud
rests with both those charged with governance of the entity and management; and

• in respect to irregularities, considered to be non-compliance with laws and regulations, are to

obtain sufficient appropriate audit evidence regarding compliance with the provisions of those
laws and regulations generally recognized to have a direct effect on the determination of
material amounts and disclosures in the financial statements (‘direct laws and regulations’),
and perform other audit procedures to help identify instances of non-compliance with other
laws and regulations that may have a material effect on the financial statements. We are not
responsible for preventing non-compliance with laws and regulations and our audit
procedures cannot be expected to detect non-compliance with all laws and regulations

Our approach in summary was as follows:

• We obtained a general understanding of the legal and regulatory frameworks that are
applicable to the Company and determined that the direct laws and regulations related to
elements of company law and tax legislation, and the financial reporting framework. Our
considerations of other laws and regulations that may have a material effect on the financial
statements included permissions and supervisory requirements of the Prudential Regulation
Authority (‘PRA’) and the Financial Conduct Authority (‘FCA’).
 - 67 -

• We obtained a general understanding of how the Company complies with these legal and
regulatory frameworks by making enquiries of management, internal audit, and those
responsible for legal and compliance matters. We also reviewed correspondence between
the Company and UK regulatory bodies; reviewed minutes of the Board and Risk Committee;
and gained an understanding of the Company’s approach to governance, demonstrated by
the Board’s approval of the Company’s governance framework and internal control
processes.

• For direct laws and regulations, we considered the extent of compliance with those laws and
regulations as part of our procedures on the related financial statement items.

• For both direct and other laws and regulations, our procedures involved: making enquiry of
those charged with governance and senior management for their awareness of any non-
compliance of laws or regulations, inquiring about the policies that have been established to
prevent non-compliance with laws and regulations by officers and employees, inquiring about
the Company’s methods of enforcing and monitoring compliance with such policies, and
inspecting significant correspondence with the FCA and PRA.

• We understood the activities of the Company to primarily include deposit taking, with
overdrafts as the main product offering. The Company received its full banking license in
April 2017.

• We assessed the susceptibility of the Company’s financial statements to material

misstatement, including how fraud might occur by inappropriate recognition of revenue and
management override of controls.

• We continued to identify weaknesses in the Company’s control environment in excess of

what would be considered normal in the banking industry. This limited the opportunities that
we had to place audit reliance on the design, implementation and operating effectiveness of
the key controls that management relies on for the proper functioning of the Company’s
systems and processes. This is because the control environment is not mature and is
currently under development. This substantially increases operational risk, and required us to
identify and test any compensating manual controls and undertake further additional
substantive testing in most areas of the Company’s operations.

• The Company operates in the banking industry which is a highly regulated environment. As
such the Senior Statutory Auditor considered the experience and expertise of the
engagement team to ensure that the team had the appropriate competence and capabilities,
which included the use of specialists where appropriate.

A further description of our responsibilities for the audit of the financial statements is located on
the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.

Javier Faiz (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor
London
27 June 2018

Notes:
1. The maintenance and integrity of the Monzo Bank Limited web site is the responsibility of
the directors; the work carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for any changes that may
 - 68 -

have occurred to the financial statements since they were initially presented on the web
site.
2. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
 - 69 -

B. Independent auditors' report for FY2017

TO THE MEMBERS OF MONZO BANK LIMITED (FORMERLY FOCUS FS LIMITED)

We have audited the financial statements of Monzo Bank Limited (formerly Focus FS Limited) for
the 12 months ended 28 February 2017 which comprise the Statement of Comprehensive
Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement
of Cash Flows and the related notes 1 to 19. The financial reporting framework that has been
applied in their preparation is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state
to the company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement set out on page 9, the
directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial
statements sufficient to give reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the company’s circumstances and have been
consistently applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the financial statements. In
addition, we read all the financial and non-financial information in the Directors’ Report to identify
material inconsistencies with the audited financial statements. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at 12 months ended 28
February 2017 and of its loss for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union;
and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
 - 70 -

• the Board of Directors’ Report have been prepared in accordance with applicable legal
requirements.

Matters on which we are required to report by exception

In light of the knowledge and understanding of the Bank and its environment obtained in the
course of the audit, we have identified no material misstatements in the Board of Directors’
Report. We have nothing to report in respect of the following matters where the Companies Act
2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not
been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Javier Faiz (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor
London
22nd June 2017

The following foot note should be added to the audit report when it is published or distributed
electronically:
Notes:
1. The maintenance and integrity of the Monzo Bank Limited (formerly Focus FS Limited) web
site is the responsibility of the directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since they were initially
presented on the web site.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
 - 71 -

PART V
DIRECTORS, PROPOSED DIRECTOR, SENIOR MANAGEMENT, CORPORATE GOVERNANCE, AND
EMPLOYEES

1. DIRECTORS, PROPOSED DIRECTOR AND SENIOR MANAGERS OF MONZO

Monzo's board of Directors (the "Board") comprises of two executive Directors (the
"Executive Directors"), three independent non-executive Directors (the "Independent
Non-Executive Directors") and two non-executive Directors (the "Investor Directors").

Name Position

Tom Blomfield Chief Executive Officer and Co - Founder

Gary Dolman Co - Founder

Amy Kirk Senior Independent Non-Executive

Director

Tim Brooke Independent Non-Executive Director

Chairman

Keith Woollard Independent Non-Executive Director

Eileen Burbidge Non-Executive Director – Passion Capital

Miles Grimshaw Non-Executive Director – Thrive

It is envisaged that Gary Dolman will retire from Monzo's Board upon the appointment of
Alwyn Jones (CFO), the latter’s appointment being subject to regulatory approval.

The business address of each of the Directors and the Proposed Director is 38 Finsbury
Square and 31, 33 and 35 Wilson Street, London EC2A 1PX.

1.1 Profiles of the Directors and Proposed Director of Monzo

Tom Blomfield (Chief Executive Officer and Co-Founder)

Serial technology entrepreneur, author and speaker, Tom is passionate about improving
customers’ experiences and trust in banking. Tom was the founder of GoCardless, the
UK’s largest direct debit provider, regulated by the FCA as an authorised payments
institution, where he had approved person status. Tom also served as VP of Growth of
Grouper, a digital social networking company based in New York City. Previously, he was
a co-founder at Buy Or Sell Online (boso.co.uk), which raised venture capital financing
from renowned US start-up accelerator Y Combinator. Tom started his career in
management consulting. He was named Rising Star Banker of the Year 2016 and one of
the top five Entrepreneurs under 30 in Europe by the European Commission in 2013. Tom
has degrees in Law from University of Oxford and Université Panthéon Assas in Paris.

Gary Dolman (Co-Founder)

Gary is a big four qualified chartered accountant who has audited, consulted on and
worked for financial services firms since 1984 in London and Sydney. He has held the
role of CFO at Mizuho International plc and ABN AMRO UK, where he had approved
person status. He has also been the Global CFO and COO for ABN AMRO Global
Transaction Banking. He holds a BA in Accountancy from Exeter University.
 - 72 -

Amy Kirk (Senior Independent Non-Executive Director)

Amy brings deep experience in retail banking across all product lines and in particular
secured and unsecured lending. She has led large operations as well as specialist
strategy, risk and transformation teams. She was previously the Director of Credit and
Fraud for Bank of America Europe Card Services and the Chief Risk Officer of
OneSavings Bank. She also has significant experience in the United States and was
responsible for Credit Acquisition Strategies at MBNA America prior to her move to the
UK. Amy holds an MBA with concentration in International Finance from Thunderbird
School of Global Management and a B.B.A. in International Management from James
Madison University.

Tim Brooke (Independent Non-Executive Director and Chairman)

Tim began his career in banking with Lloyds Merchant Bank before progressing to
JPMorgan Chase & Co., where he spent 14 years performing a number of executive roles
both in the UK and internationally. Tim’s extensive banking and financial services
experience led him to PwC where he was partner in charge of their Risk Assurance
Services consultancy for the North of the UK. Subsequent to this, Tim was part of the
rescue team for the Northern Rock post the financial services crash. More recently, Tim
has held non-executive director roles in a number of leading companies, spanning
FTSE100 conglomerates to challenger banks and Health & Wellbeing businesses. He
brings a wealth of strategy, risk and governance experience to the organisations he
serves.

Keith Woollard (Independent Non-Executive Director)

Keith brings extensive experience in regulatory relationships management, as well as

corporate governance and risk and compliance functions. Keith has served as Chief Risk
Officer, leading the development of its risk functions, and Compliance Director, with
responsibility for Compliance and Anti-Financial Crime functions, at M&S Bank in Chester
(UK) and has served as Head of Compliance at Post Office. He previously held various
roles at the Financial Services Authority ("FSA"), including serving as Head of Intelligence
and Approval Cases, delivering financial crime intelligence to all FSA functions and
counterparties and investigating non-routine applications for Approved Person status.

Eileen Burbidge (Non-Executive Director – Passion Capital)

Eileen Burbidge is a Partner at Passion Capital, the pre-eminent early-stage technology

venture fund based in London. She brings extensive operational experience to her
investment activities gleaned from business and product roles at Yahoo!, Skype, Apple
and elsewhere. In addition to Passion Capital, Eileen is also the Chair of Tech Nation,
formerly TechCity UK which is the British government-backed organisation supporting the
digital economy across the UK. She is also the UK Treasury’s Special Envoy for FinTech,
Tech Ambassador for the Mayor of London’s office and served on former UK Prime
Minister David Cameron’s Business Advisory Group. Eileen was made an MBE for
services to Business in June 2015 and holds a BSc Engineering degree in Computer
Science from the University of Illinois at Urbana-Champaign.

Miles Grimshaw (Non-Executive Director – Thrive)

Miles is a partner at Thrive, a venture capital firm that currently manages approximately
$2.5 billion in assets. Thrive invests in, supports and builds innovative early and growth
stage technology companies, and its investments include GitHub, Instacart, Oscar, Slack,
Stripe, and Robinhood, among many others. Miles currently serves on the board of
 - 73 -

directors at a number of companies, including Benchling and Lattice. Miles holds a degree
in Economics from Yale University.

Alwyn Jones (Chief Financial Officer and Proposed Director)

Alwyn commenced his appointment at Monzo on 10 September 2018 as the new CFO.
He has worked in financial services for the last 20 years in both an advisory and P&L line
management capacity, specialising in strategy, retail banking and consumer lending. His
previous executive responsibilities included heading up Retail International Clients and
Consumer Lending at Barclays Bank PLC, latterly Barclays UK (post ring-fencing). Having
spent five years of his career post-MBA at Bain & Company, Alwyn is an experienced
business strategist. There, he led various strategic reviews, ranging from strategy reviews
for Clients to developing and delivering training in-house. During his seven years at
Barclays, Alwyn managed numerous teams, had a track record of delivery covering
strategy development, capital markets, corporate finance and M&A, as well as scaling
digital businesses and operational execution. He delivered exceptional business
performance based around deep data-based understanding of financial information and
customer needs. He has experience of managing budgets and project implementation
costs, having had line responsibility for two significant P&Ls at Barclays and also
accountable executive for the delivery of a number of projects. Alwyn holds a MBA from
the London Business School and a MA in PPE from Keble College, Oxford.

1.2 Directors' remuneration

Year ended Year ended

28 February 2018 28 February 2017

£'000 £'000

Total Directors’ emoluments

Wages and salaries 473 65

Share based payments 279 73

Contributions to defined contribution 2 -

plans

754 138

Highest paid Director

Wages and salaries 139 60

Share based payments 166 -

305 60
 - 74 -

As at 28 February 2018 there were no loans outstanding to directors (2017 £nil) and there
were no loans made to directors during the period (2017 £nil).

1.3 Executive Directors' employment contracts

Tom Blomfield was appointed as Monzo's Chief Executive Officer with effect from 18
February 2015. He is engaged under a permanent contract of employment with Monzo,
the last amendment to which is dated 18 September 2018.

Gary Dolman is engaged under a permanent contract of employment with Monzo dated
12 August 2016.

The key provisions of the Executive Directors’ employment agreements are set out below:

Executive Director Benefits on Date of Contract Date of expiry of

termination contract

Tom Blomfield 12 weeks' 18 September 2018 N/A

pay in lieu of
notice and
any holiday
allowance
accrued up
until the end
of the 12
weeks paid
notice

Gary Dolman 3 calendar 12 August 2016 N/A

months in
lieu of notice
and any
holiday
allowance
accrued up
until the end
of the 12
weeks paid
notice

1.4 Proposed Director's employment contract

The key provisions of the Proposed Director's appointment are set out below:

Proposed Director Benefits on Date of Contract Date of expiry of

termination contract

Alwyn Jones 12 weeks' 10 September 2018 N/A

pay in lieu of
notice and
any holiday
allowance
accrued up
until the end
of the 12
weeks paid
notice
 - 75 -

1.5 Non-Executive Directors: appointment

The key provisions of the Non-Executive Directors’ appointment are set out below:

Non-Executive Position Benefits on Date of Term of

Director termination Appointment contract

Amy Kirk Senior INED N/A 24 January 2017 3 years

Tim Brooke INED/ N/A 15 September 2018 3 years

Chairman

Keith Woollard INED N/A 23 May 2016 3 years

Eileen Burbidge NED N/A 21 April 2015 N/A

Miles Grimshaw NED N/A 21 February 2017 N/A

There are no family relationships between any of the Directors, Proposed Director or the
Senior Management.

1.6 Profiles of the Senior Managers

Paul Rippon (Deputy Chief Executive Officer and Co-Founder)

Paul has 26 years of experience in UK and Ireland’s financial sector across six banks and
building societies, together with two start-up banks. He led teams of up to 2,000 people,
holding a variety of roles, covering most aspects of retail banking, including Head of
Banking and Risk Director, where he primarily helped banks better connect with
customers and improve their risk management skills. Many of these roles involved
approved person status. He has served as a member of ExCo, ALCO and other
governance bodies. As an entrepreneur, he has co-founded businesses across
agriculture, manufacturing and digital services. Paul is a qualified banker holding the
ACIB and is a Fellow of the Chartered Institute of Bankers. He is also a qualified learning
coach and for the past 16 years taught hundreds of students at the London Institute of
Banking and Finance across a variety of subjects, most recently for the MSc in Banking
Practice and Management.

Jonas Huckestein (Co-Founder)

After an early career in management consulting, Jonas spent more than four years in
Silicon Valley building and deploying successful technology products for the ecommerce
website Groupon, the investment platform AngelList and most recently for his own
venture-backed, profitable business, HipDial. He is a co-founder and executive member of
the international StartupBus network of over 1,000 engineers, designers and
entrepreneurs and is excited to apply his technology start-up experience and network to
the banking sector. Jonas holds a degree in Mathematics from the University of Cologne,
a Computer Science Degree from the University of Munich and was the recipient of the
Deutsche Telekom's scholarship for future technology executives. Jonas leads the
organisation scaling team at Monzo which is responsible for managing and scaling
Monzo's organisation structure and operations.
 - 76 -

Meri Williams (Chief Technology Officer)

Meri is an experienced CTO who has led and scaled technology organisations that build
and run brilliant products and services, in a range of sectors including government,
ecommerce, telco and manufacturing. She started her career with 10+ years at P&G, later
working as Head of Engineering at M&S, and recently being the CTO for MOO, an award-
winning online print and design company. She is accustomed to high-pressure, business
critical environments, usually requiring 24x7x365 operations, and delivering excellent
services and optimising costs simultaneously. Meri excels at scaling up teams,
transforming processes and organisations to go from good to great. She is passionate
about technology and building smart multi-functional teams and organisations to develop
brilliant products. Meri is also a published author, international speaker and co-curator &
host of The Lead Developer conference. She holds a Bachelor of Science from the
University of Bath.

Tom Foster - Carter (Chief Operating Officer)

Tom has over 13 years of experience in retail financial services and has specialised in
strategy and operations for the majority of his career. Prior to joining Monzo, Tom co-
founded and headed operations at two start-ups: Curve, a financial services technology
company which offers an all-in-one payments card; and Osper, a financial services
technology company which helps children to manage their money responsibly, using a
specially designed prepaid card and app. Tom has also spent a number of years at two
world-leading consulting firms, Bain & Company and Accenture, gaining relevant
expertise in advisory roles for a number of major retail and digital challenger banks
including Barclays, Lloyds TSB and ABN AMRO and independently consulted for Tandem
Bank. Tom holds an MBA from INSEAD Business School and a B.A. Degree from New
College Oxford. Tom is responsible for Operations, Customer Services, Financial Crime,
People and Hiring functions at Monzo.

Dean Nash (General Counsel and Interim Chief Risk Officer (subject to regulatory
approval))

Prior to becoming Interim Chief Risk Officer in October 2018, Dean was General Counsel
since June 2018 and had been Head of Legal and Compliance at Monzo since November
2016. Before joining Monzo, Dean worked as Lead Legal Counsel at Barclays from 2013
until 2016 and Lloyds Banking Group from 2012 to 2013. Prior, Dean was Senior
Associate at Nabarro LLP from 2007 to 2012 and Associate at Salans from 2006 to 2007.
Dean holds a Bachelor of Laws (LLB) Degree from Cardiff University.

Tim Trailor (Chief Credit Officer)

Tim commenced his role at Monzo on 3 September 2018. He has over 17 years
experience delivering cutting edge data analytics and using it to optimise businesses. He
has worked at both large banks such as CapitalOne and Barclays and specialist lenders,
most recently as VP of Klarna. His career has spanned most sectors within the unsecured
consumer lending industry, from prime (credit cards, loans, current accounts, point-of-sale
finance) through to high cost short term lending (payday lending, sub-prime loans) and
has covered a large number of European and North American territories. Tim holds an
MBA and a MSC in Physics from the Imperial College of London.

1.7 Directors’, the Proposed Director's and Senior Management's Other Interests

In addition to being Directors, the Proposed Director and Senior Management of Monzo,
the Directors, Proposed Director and Senior Management hold or have held directorships
 - 77 -

of the companies and are, or were, partners of the partnerships specified below, within
the five years prior to the date of the Prospectus.

Current Directorships/ Previous Directorships/

Partnerships Partnerships

Tom Blomfield N/A Gocardless Ltd

Gary Dolman Betheref Ltd Algbank Nominees Limited
Zopzat Limited Blydenstein Nominees, Limited
Leigh Place Cobham, Residents
Association Limited (The)
Quoted U.K. Limited
RBS Equity Products (UK)
Limited
RBS Finance (UK) Limited
RBOS Indices Limited
RBS GTS Services Limited
Amy Kirk Maryland Partners Limited N/A
Tim Brooke Broadlands Finance Limited BDML Connect Limited
Butterfield Mortgages Limited Capital Commercial Insurance
Charter Court Financial Services Services Limited
Group Plc Capita Employee Benefits Limited
Charter Court Financial Services Capita Employee Benefits
Limited
(Consulting) Limited
Charter Mortgages Limited
Exact Mortgage Experts Limited Capita Life & Pensions Regulated
Leopold Joseph Holdings Limited Services Limited
Pib Risk Services Limited Capita Insurance Services
TFP Schemes Limited Limited
Thistle Insurance Services Limited Capital Managing Agency Limited
Valiamo Limited Charter Court Financial Services
Limited
Delta Underwriting Agency
Limited
Fish Administration Ltd
Hero Insurance Services Limited
Lancaster Insurance Services
Limited
Link Financial Investments
Limited
Link Fund Administrators Limited
Link Fund Solutions Limited
Link Market Services Trustees
Limited
Link Mortgage Services Limited
Link Treasury Services Limited
Marsden Building Society
Minton House Group Limited
National Dental Plan Limited
Simplyhealth Access
Simplyhealth Group Limited
Sureterm Direct Limited
Keith Woollard N/A Kings Meadow Nominees Limited
Marks And Spencer Financial
Services Plc
Marks And Spencer Retail
Financial Services Holdings
 - 78 -

Limited
Marks And Spencer Savings And
Investments Limited
Marks And Spencer Unit Trust
Management Limited
Eileen Burbidge Car Throttle Limited Adludio Limited
Dixons Carphone (with effect from Birdback Limited
1 January 2019) Duedil Limited
Dogmates Limited (Butternut Box) Duego AB
Eris Group Limited (Native) Flattr Networks Ltd
Focal Point Positioning Limited
Hotspring Ventures Limited
Marshmallow Technology Limited
Passion Capital (FP) LLP Luluvise Inc
Passion Capital (GP) Limited Memoto AB
Passion Capital FS (FP) LLP Open Signal Inc
Passion Capital FS (GP) LLP Pinipa Limited
Passion Capital II (FP) LLP Public Group International
Passion Capital II (GP) LLP Limited
Passion Capital III (FP) LLP Public Group Limited
Passion Capital III (GP) LLP Stylefantasia Limited
Passion Capital Investments LLP Urban Massage Ltd
Passion Capital Investments II LLP
Vinaya Technologies Limited
Passion Capital Nominees Limited
PolyAI Limited
Prowler.io Limited
Swipe Tech Limited
Tech Nation Group Limited
Tide Holdings Limited
Typescore Limited
White Bear Yard Management
Limited
Wirewax Limited
Miles Grimshaw Benchling, Inc. N/A
Degree, Inc. (dba Lattice)
Thrive
Timberline Foundation Inc.
Paul Rippon Barnacre Alpacas Exchange Complete Limited
Blossom Holdings Limited Kielder Property Management Ltd
Bold Change Limited Norwich And Peterborough (Lbs)
The Border Mill Limited Limited
Jonas N/A N/A
Huckestein
Tom Foster 26 Cavendish Road Management N/A
Carter Company
Limited
Dean Nash N/A N/A
Meri Williams N/A N/A
Tim Trailor Analytical Finance Ltd Alternative Finance Consulting
Services Ltd
Curo Transatlantic Ltd
SRC Transatlantic Ltd
Alwyn Jones N/A N/A

1.8 Additional Information

Save for the shareholdings disclosed in paragraph 2.1 of this Part V, there are no actual
or potential conflicts of interests between the duties any Director or Proposed Director has
to Monzo and the private interests and/or other duties they may also have. Save for the
options held by the Proposed Director as disclosed in paragraph 2.1 of this Part V, as at
 - 79 -

the Latest Practicable Date, no Directors have any options over Shares under the Monzo
Employee Share Plans, (as detailed in paragraph 8 of Part VII). There are no interests
that are material to the Offer.

No Director or Proposed Director has a material interest in any significant contract with
Monzo.

No Director or Proposed Director was selected to be a director of Monzo pursuant to any

arrangement or understanding with any major customer, supplier or other person having a
business connection with Monzo.

No restrictions have been agreed by any Director or Proposed Director on the disposal
within a certain period of time of his holding in Monzo.

There are no family relationships between any of the Directors, Proposed Director or the
Senior Management.

None of the Directors or Proposed Director has:

• been convicted in relation to a fraudulent offence during the period of five years
preceding the date of this document;

• any unspent convictions in relation to indictable offences;

• any bankruptcy order made against him or entered into any voluntary
arrangements;

• been associated with any bankruptcy, receivership, liquidation while acting in the
capacity of a member of the administrative, management or supervisory body or
of senior manager of any company during the period of five years preceding the
date of this document;

• been subject to any official public incrimination and/or sanction by statutory or

regulatory authorities (including designated professional bodies);

• been disqualified by a court from acting as a member of the administrative,

management or supervisory bodies of any issuer or from acting in the
management or conduct of the affairs of any issuer;

• been a director of a company which has been placed in receivership, compulsory

liquidation, creditors’ voluntary liquidation, administration, been subject to a
company voluntary arrangement or any composition or arrangement with its
creditors generally or any class of its creditors whilst he was a director of that
company or within the 12 months after he ceased to be a director of that
company;

• been a partner in any partnership which has been placed in compulsory

liquidation, administration or been the subject of a partnership voluntary
arrangement whilst he was a partner in that partnership or within the 12 months
after he ceased to be a partner in that partnership; or

• been the owner of any assets or a partner in any partnership which has been
placed in receivership whilst he was a partner in that partnership or within the 12
months after he ceased to be a partner in that partnership.
 - 80 -

2. INTERESTS OF DIRECTORS AND THE PROPOSED DIRECTOR IN MONZO'S SHARE CAPITAL

Save as set out in paragraph 2.1 below, no Director or Proposed Director has any
interests (beneficial or non-beneficial) in the share capital of Monzo.

2.1 Directors’ and Proposed Director's shareholdings and options

As at the Latest Practicable Date, the interests of the Directors, Proposed Director and
persons connected to them as notified to Monzo in accordance with the Articles are as
follows4:

Total number of Shares % of issued share Options

capital

Tom Blomfield 9,174,911 7.77% N/A

Gary Dolman 1,006,388 0.85% N/A

Amy Kirk 37,592 0.03% N/A

Tim Brooke 130,745 0.11% N/A

Keith Woollard 80,451 0.07% N/A

Eileen Burbidge (Passion 0a 0%b N/A

Capital)
d
Miles Grimshaw (Thrive) 0c 0% N/A

Alwyn Jones (Proposed N/A N/A CSOP: 12,765

Director) Unapproved Plan: 197,235
a
Eileen Burbidge is an Investor Director, representing Passion Capital, which holds 37,824,021 Shares.
b
Passion Capital has a 32.02 % direct interest in Monzo's issued share capital.
c
Miles Grimshaw is an Investor Director, representing Thrive, which holds 16,855,303 Shares.
d
Thrive has a 14.27% direct interest in Monzo's issued share capital and is indirectly interested in a further 0.15% of Monzo's Shares
through its shareholdings in another Monzo shareholder.

No Director or Proposed Director has or has had any interest in any transactions which
are, or were, unusual in their nature or conditions or are, or were, significant to the
business of Monzo and which were effected by Monzo during the current or immediately
preceding financial year or during an earlier financial year and which remain in any
respect outstanding or unperformed.

There are no outstanding loans or guarantees granted or given by Monzo to or for the
benefit of any of the Directors or Proposed Director, save that qualifying third party
indemnity provisions are in place for the benefit of the Directors in relation to certain
losses and liabilities which they may potentially incur to third parties in the course of their
duties.

3. CORPORATE GOVERNANCE

The Board is committed to the highest standards of corporate governance. While Monzo
is an unlisted company and so is not required by law to comply with the provisions of the
UK Corporate Governance Code or the AIM Rules, Listing Rules or Disclosure and
Transparency Rules of the UK Listing Authority, the Board still pay high regard to
corporate governance.

Monzo has a number of governance meetings such as the monthly Board meetings and
the weekly Executive Committee meetings. The Directors make minutes of these

4
For the purpose of this table, figures assume that all transfers of Ordinary Shares and their re-designation as E Ordinary Shares in
connection with the Series E Investment Round have completed (completion is pending receipt of stamped stock transfer forms from
HMRC).
 - 81 -

meetings available internally and encourage employees to question decisions made by

the Board and the Executive Committee. Monzo also has a Risk and Compliance
Committee, an Audit Committee, a Remuneration Committee, a Nomination Committee,
and an Assets and Liability Committee.

Remuneration Committee

The Remuneration Committee is made up of Amy Kirk (Committee Chairman), Keith

Woollard, Tim Brooke and Eileen Burbidge. The Remuneration Committee is required to
meet at least once per annum.

The Remuneration Committee is responsible for the remuneration and expense policies
for Senior Management and it oversees remuneration for Monzo employees more
generally, including recommending to the Board the framework and policy for the
remuneration of the Executive Directors. The remuneration of the Non-Executive
Directors is determined by the Chairman and the Executive Directors. The Remuneration
Committee takes into account the business strategy of the Group and how the
remuneration policy reflects and supports that strategy.

Audit Committee

The Audit Committee is made up of Tim Brooke (Committee Chairman), Amy Kirk and
Keith Woollard. The Audit Committee is required to meet at least once a quarter and in
line with regulatory reporting requirements.

The primary objective of the Audit Committee is to assist the Board in fulfilling its
responsibilities relating to:

(a) monitoring the integrity of the financial statements of Monzo and any formal
announcements relating to Monzo's financial performance and reviewing
significant financial reporting judgements contained in them;

(b) reviewing Monzo's internal financial controls;

(c) reviewing Monzo’s internal control and compliance systems;

(d) monitoring and review the effectiveness of Monzo’s internal audit function;

(e) making recommendations to the Board, for it to put to the Shareholders for their
approval in a general meeting, in relation to the appointment, re-appointment and
removal of the external auditor and to approve the remuneration and terms of
engagement of the external auditor;

(f) reviewing and monitoring the external auditor’s independence and objectivity and
the effectiveness of the audit process, taking into consideration relevant UK
professional and regulatory requirements;

(g) developing and implementing policy on the engagement of the external auditor to
supply non-audit services, taking into account relevant ethical guidance regarding
the provision of non-audit services by the external audit firm;

(h) approving the whistleblowing policy and review whistleblowing updates (if any);
and
 - 82 -

(i) reporting to the Board on how it has discharged its responsibilities, undertaking a
self assessment of the Audit Committee's effectiveness and periodically seeking
external review.

As part of Monzo's commitment to strong corporate governance, a board effectiveness

review was undertaken in May 2018 and Monzo is in the process of implementing the
recommendations from this review. In connection with these recommendations Tim
Brooke was appointed as chairman and a search is currently underway to identify a long
term chair and adopt additional processes and procedures to further enhance the
effectiveness of the Board and Monzo's corporate governance.

4. EMPLOYEES

As at the Latest Practicable Date, the Group employed approximately 500 persons
(including the Directors).
 - 83 -

PART VI
TAXATION

1. UNITED KINGDOM TAXATION

The following statements are intended only as a general guide to certain UK tax
considerations and do not purport to be a complete analysis of all potential UK tax
consequences of acquiring, holding or disposing of E Ordinary Shares. They are based
on current UK legislation and what is understood to be the current practice of HMRC as at
the Latest Practicable Date, both of which may change, possibly with retrospective effect.
They relate only to certain limited aspects of the UK tax treatment of Shareholders who
are resident and domiciled for tax purposes in and only in the UK (except insofar as
express reference is made to the treatment of non-UK residents), who hold their E
Ordinary Shares as an investment (other than in a new individual savings account or self-
invested pension plans) and who are the absolute beneficial owners of both the E
Ordinary Shares and any dividends paid on them. The tax position of certain categories of
Shareholders who are subject to special rules (such as persons acquiring their E Ordinary
Shares in connection with employment, dealers in securities, insurance companies and
collective investment schemes) is not considered. The statements summarise the current
position and are intended as a general guide only. Prospective investors who are in any
doubt as to their tax position or who may be subject to tax in a jurisdiction other than the
UK are strongly recommended to consult their own professional advisors.

1.1 Taxation of dividends

Under current UK tax law, Monzo will not be required to withhold amounts on account of
UK tax at source when paying a dividend.

A Shareholder’s liability to tax on dividends will depend upon the individual circumstances
of the Shareholder.

(a) Individuals

From 6 April 2018, an individual Shareholder who is resident for tax purposes in
the UK is entitled to a tax-free dividend allowance of £2,000 per year. The
dividend income of the individual Shareholder in excess of this allowance will be
taxed at different rates depending on whether the individual shareholder is a
basic, higher or additional rate taxpayer in the UK. In working out the rate at which
the individual pays tax, dividends are treated as the top slice of an individual's
income and dividend income that is within the dividend allowance will count
towards determining the individual's marginal rate.

UK resident individuals will pay tax on any dividends received over the £2,000
dividend allowance at a rate of 7.5 per cent. on dividend income within the basic
rate band; 32.5 per cent. on dividend income within the higher rate band; and 38.1
per cent. on dividend income within the additional rate band.

(b) Companies

Dividends paid on the E Ordinary Shares to corporate Shareholders within the

charge of UK corporation tax will be subject to corporation tax. But, generally,
(subject to anti-avoidance rules) dividends paid to UK resident companies that are
not "small" companies (as defined in section 931S Corporation Tax Act 2009) will
fall within one of the exemptions from corporation tax on dividends. Shareholders
 - 84 -

within the charge to corporation tax are advised to consult their own professional
advisers to establish whether they qualify for one of the exemptions.

(c) Tax exempt Shareholders

Tax exempt UK resident Shareholders, including pension schemes and charities,

will not be liable to UK tax on dividends paid by Monzo.

(d) Non-residents

Shareholders resident outside the UK for tax purposes will not generally have any
UK tax liability on dividends paid by Monzo. But, where a non-UK resident
Shareholder carries on a trade, profession or vocation in the UK and the dividends
are a receipt of that trade or, in the case of corporation tax, the E Ordinary Shares
are held by or for a UK permanent establishment through which the trade is
carried on, there may be a liability to UK tax.

A Shareholder resident outside the UK may be subject to foreign taxation on

dividend income under the law of the relevant foreign jurisdiction, and should
consult his, her or its own tax advisor regarding his, her or its tax liabilities on
dividends received from Monzo.

1.2 Taxation of chargeable gains

A Shareholder’s liability to tax on chargeable gains will depend upon the individual
circumstances of the Shareholder.

(a) Individuals

If a UK resident individual Shareholder sells or otherwise disposes of all or some

of the E Ordinary Shares, he or she may, depending on his or her circumstances
and subject to any available exemption or relief, incur a liability to CGT.

An individual Shareholder has an annual exemption (£11,700 for the tax year
ending 5 April 2019) and so will only be subject to CGT to the extent his or her
total chargeable gains in the year (including any gains on the disposal or deemed
disposal of his or her E Ordinary Shares) exceed this annual exemption.

The rate of CGT will depend on the individual Shareholder's total taxable income
and gains in the relevant tax year. An individual Shareholder whose total taxable
income and gains in the tax year (including gains on a disposal or deemed
disposal of E Ordinary Shares) are more than the individual's basic rate band will
generally be subject to CGT at 20 per cent. on the gain on the disposal or deemed
disposal of the E Ordinary Shares (save for any part of the gain which, when
aggregated with his or her other taxable income and gains during the tax year, is
less than or equal to the individual's basic rate band). An individual Shareholder
whose total taxable income and gains in a given tax year (including gains on a
disposal or deemed disposal of E Ordinary Shares) are less than or equal to the
individual's basic rate band will generally be subject to CGT at 10 per cent. of the
gain on the disposal or deemed disposal of the E Ordinary Shares.

(b) Companies

A Shareholder within the charge to UK corporation tax that sells or otherwise

disposes of all or some of the E Ordinary Shares may, depending on its
 - 85 -

circumstances and subject to any available exemption or relief, incur a liability to

corporation tax on chargeable gains.

Chargeable gains realised by Shareholders within the charge to UK corporation

tax will be subject to corporation tax at the rate of corporation tax applicable to the
company making the disposal or deemed disposal.

(c) Non-residents

A Shareholder who is not resident for tax purposes in the UK will not generally be
subject to CGT on the disposal or deemed disposal of E Ordinary Shares unless
the Shareholder is carrying on a trade, profession or vocation in the UK through a
branch or agency (or, in the case of a corporate Shareholder, a permanent
establishment) in connection with which the E Ordinary Shares are used, held or
acquired.

Such Shareholders may be subject to foreign taxation on any gain under local law.

1.3 Stamp duty and stamp duty reserve tax ("SDRT")

The following comments are intended as a guide to the general stamp duty and SDRT
position and do not relate to persons such as market makers, brokers, dealers,
intermediaries and persons connected with depository arrangements or clearance
services, to whom special rules apply.

No UK stamp duty or SDRT will be payable on the issue of definitive share certificates
representing E Ordinary Shares.

UK stamp duty (at the rate of 0.5 per cent of the amount of the value of the consideration
for the transfer rounded up where necessary to the nearest £5) is payable on any
instrument of transfer of the E Ordinary Shares executed within the UK other than when
the value of the consideration for the transfer is less than £1,000 (and does not form part
of a larger transaction or series of transactions for which the aggregate consideration
exceeds £1,000).
 - 86 -

PART VII
ADDITIONAL INFORMATION

1. PERSONS RESPONSIBLE

Monzo, the Directors, and the Proposed Director, whose names appear on page 34,
accept responsibility for information contained in this document. To the best of the
knowledge of Monzo, the Directors, and the Proposed Director (who have taken all
reasonable care to make sure that such is the case), the information contained in this
document is in accordance with the facts and contains no omission likely to affect its
import.

2. COMPANY DETAILS

2.1 Monzo was incorporated in England and Wales on 18 February 2015 under the Act with
registered number 09446231 as a private company limited by shares with the name
Focus FS Limited. The liability of the members of Monzo is limited. On 21 October 2016,
Monzo changed its name to Monzo Bank Limited.

2.2 Monzo’s registered office is at 38 Finsbury Square and 31, 33 and 35 Wilson Street,
London EC2A 1PX. The telephone number of Monzo’s registered office is 0800 802 1281.

3. SHARE CAPITAL

3.1 The issued and fully paid share capital of Monzo, as at the close of business on the Latest
Practicable Date, consists of5:

Class of share capital Total number % of Nominal

of Shares issued value of
issued share shares
capital issued
Ordinary Shares of £0.0000001 each 24,382,857 20.64% £2.4382857

A1 Ordinary Shares of £0.0000001 each 10,016,600 8.48% £1.00166

A2 Ordinary Shares of £0.0000001 each 11,676,610 9.88% £1.167661

B Ordinary Shares of £0.0000001 each 6,203,955 5.25% £0.6203955

C Ordinary Shares of £0.0000001 each 21,908,097 18.55% £2.1908097

D Ordinary Shares of £0.0000001 each 30,110,446 25.49% £3.0110446

E Ordinary Shares of £0.0000001 each 13,829,128 11.71% £1.3829128

Total 118,127,693 100.00% £11.8127693

3.2 At the Latest Practicable Date, none of the Shares were held in treasury.

3.3 The following changes in the share capital have taken place between 18 February 2015
and the Latest Practicable Date:

5
For the purpose of this table, figures assume that all transfers of Ordinary Shares and their re-designation as E Ordinary Shares in
connection with the Series E Investment Round have completed (completion is pending receipt of stamped stock transfer forms from
HMRC).
 - 87 -

(a) on 18 February 2015, 1,000 Ordinary Shares were issued at a nominal value of
£0.000001 each;

(b) on 28 March 2015, 1,000 Ordinary Shares were consolidated into 100 Ordinary
Shares with a nominal value of £0.00001 each;

(c) from 28 March 2015 to 09 April 2015, 350,480 Ordinary Shares were issued at a
nominal value of £0.00001 each;

(d) on 21 April 2015, 45,425 Ordinary Shares were issued for a subscription price of
£19.967 per share;

(e) on 12 August 2015, 54,741 Ordinary Shares were issued for a subscription price
of £19,967 per share;

(f) on 09 December 2015, 50,231 Ordinary Shares were re-designated as deferred

shares with a nominal value of £0.00001 each;

(g) on 01 March 2016, 13,125 Ordinary Shares were re-designated as deferred

shares with a nominal value of £0.0000001 each;

(h) on 01 April 2016, 400,515 Ordinary Shares were subdivided into 40,051,500
Ordinary Shares with a nominal value of £0.0000001 each;

(i) on 01 April 2016, 50,231 deferred shares were subdivided into 5,023,100 deferred
shares with a nominal value of £0.0000001 each;

(j) from 15 April 2016 to 18 April 2016, 11,676,610 Ordinary Shares were issued for
a subscription price of £0.5133 per share;

(k) on 27 October 2016, 5,036,225 deferred shares with a nominal value of

£0.0000001 each were purchased for cancellation by Monzo;

(l) on 27 October 2016, 5,036,225 deferred shares with a nominal value of

£0.0000001 each were cancelled by Monzo;

(m) on 27 October 2016, 6,203,955 Ordinary Shares were issued for a subscription
price of £0.7737 per share;

(n) on 27 October 2016, 355,459 Ordinary Shares were issued with a nominal value
of £0.0000001 each;

(o) from 23 February 2017 to 01 March 2017, 13,422,151 Ordinary Shares were
issued for a subscription price of £1.0058 per share;

(p) on 28 April 2017, 2,381,351 Ordinary Shares were issued for a subscription price
of £1.0058 per share;

(q) from 15 May 2017 to 29 May 2017, 139,194 Ordinary Shares were issued for a
subscription price of £1.0058 per share;

(r) from 15 May 2017 to 29 May 2017, 39,915 Ordinary Shares were issued for a
subscription price of £0.19967 per share;

(s) on 19 July 2017, 5,965,401 Ordinary Shares were issued for a subscription price
of £1.0058 per share;
 - 88 -

(t) on 03 November 2017, 11,676,610 Ordinary Shares were re-designated as A

Ordinary Shares with a nominal value of £0.0000001 each;

(u) on 03 November 2017, 6,203,955 Ordinary Shares were re-designated as B

Ordinary Shares with a nominal value of £0.0000001 each;

(v) on 03 November 2017, 21,908,097 Ordinary Shares were re-designated as C

Ordinary Shares with a nominal value of £0.0000001 each;

(w) from 06 November 2017 to 08 November 2017, 22,411,522 D Ordinary Shares

with a nominal value of £0.0000001 each were issued for a subscription price of
£2.3566 per share;

(x) on 30 November 2017, 4,940,713 Ordinary Shares were re-designated as D

Ordinary Shares with a nominal value of £0.0000001 each;

(y) from 12 December 2017 to 21 December 2017, 2,758,211 D Ordinary Shares with
a nominal value of £0.0000001 each were issued for a subscription price of
£2.3566 per share;

(z) on 13 December 2017, 7,500 Ordinary Shares with a nominal value of

£0.0000001 were issued for a subscription price of £0.19667 per share;

(aa) on 03 May 2018, 5,355 Ordinary Shares with a nominal value of £0.0000001
were issued for a subscription price of £0.5133 per share;

(bb) on 13 July 2018, 73,391 Ordinary Shares with a nominal value of £0.0000001
were issued for a subscription price of £0.00001 per share;

(cc) from 13 July 2018 to 16 July 2018, 87,119 Ordinary Shares with a nominal value
of £0.0000001 each were issued for a subscription price of £1.0058 per share;

(dd) from 13 July 2018 to 16 July 2018, 46,310 Ordinary Shares with a nominal value
of £0.0000001 each were issued for a subscription price of £2.3566 per share;

(ee) on 26 July 2018, 48,804 Ordinary Shares with a nominal value of £0.0000001
were issued for a subscription price of £0.1997 per share;

(ff) on 26 July 2018, 30,430 Ordinary Shares with a nominal value of £0.0000001
were issued for a subscription price of £0.5133 per share;

(gg) on 26 July 2018, 13,733 Ordinary Shares with a nominal value of £0.0000001
were issued for a subscription price of £0.7737 per share;

(hh) on 13 August 2018, 1,384,141 Ordinary Shares with a nominal value of

£0.0000001 were issued for a subscription price of £0.00001 per share;

(ii) on 22 August 2018, 12,335 Ordinary Shares with a nominal value of £0.0000001
were issued for a subscription price of £0.7737 per share;

(jj) on 22 August 2018, 8,216 Ordinary Shares with nominal value of £0.0000001
were issued for a subscription price of £1.0058 per share;

(kk) on 29 October 2018, 10,016,600 Ordinary Shares were re-designated as A1

Ordinary Shares with a nominal value of £0.0000001 each;
 - 89 -

(ll) on 29 October 2018, 11,676,610 A Ordinary Shares were re-designated as A2

Ordinary Shares with a nominal value of £0.0000001 each;

(mm) from 30 October 2018 to 1 November 2018, 11,018,215 E Ordinary Shares with a
nominal value of £0.0000001 were issued for a subscription price of £7.7145 per
share; and

(nn) 2,810,913 Ordinary Shares that were acquired in connection with the Series E
Investment Round are in the process of being re-designated as E Ordinary Shares
with a nominal value of £0.0000001 each6.

3.4 Other than in connection with the Monzo Employee Share Plans, no share capital of
Monzo is under option or agreed conditionally or unconditionally to be put under option.
Monzo has not issued any convertible securities, exchangeable securities or securities
with warrants and there are no acquisition rights and/or obligations over unissued share
capital or any undertakings to increase the share capital of Monzo.

3.5 The Shares in issue as at the date of the Prospectus are in registered form.

4. ARTICLES OF ASSOCIATION

4.1 Monzo's Articles of Association were adopted pursuant to a Special Resolution passed on
29 October 2018 (the "Articles").

4.2 The Articles include provisions to the following effect:

(a) Objects

The Articles do not provide for any objects of Monzo and accordingly Monzo's
objects are unrestricted.

(b) Capital structure (Article 3)

The share capital of Monzo is made up of Ordinary Shares, A1 Ordinary Shares,

A2 Ordinary Shares, B Ordinary Shares, C Ordinary Shares, D Ordinary Shares
and E Ordinary Shares (collectively, the "Shares").

All of these share classes shall rank pari passu in all respects except in respect of
the distribution of the proceeds on a Share Sale (as set out below) and anti-
dilution (as set out below).

(c) Dividends (Article 4)

Monzo may, with the consent of an Investor Majority, distribute any available
profits (other than available profits arising from an Asset Sale) among the
Shareholders pro rata to their shareholdings (whether in respect of a financial year
or as an interim dividend). All dividends will be expressed net and shall be paid in
cash.

(d) Exit Provisions and Distributions (Article 5)

On a distribution of assets on liquidation or a return of capital the surplus assets of

Monzo shall be distributed among the holders of Shares pro rata to the number of
Shares held.

6
Pending receipt of stamped stock transfer forms from HMRC.
 - 90 -

In the event of a share sale, whereby the purchaser of those shares (and those
acting in concert with the purchaser) acquires a controlling interest in Monzo (the
"Share Sale"), the proceeds payable to the selling shareholders (the "Proceeds")
shall be distributed in the following order of priority (the "Order of Priority"):

(i) first, to each holder of A1 Ordinary, A2 Ordinary Shares, B Ordinary

Shares, C Ordinary Shares, D Ordinary Shares and E Ordinary Shares;
and

(ii) second, to each holder of Ordinary Shares,

with each of the above tranches a "Priority Tranche".

If, within any Priority Tranche, there are insufficient funds from the Share Sale to
pay the original purchase price due for each Share in that Priority Tranche, the
Proceeds shall be distributed within that Priority Tranche pro rata to the respective
aggregate original purchase price paid.

If there remains a surplus following a distribution of Proceeds in accordance with

the Order of Priority, each Shareholder will be paid the difference between the
amount they actually received and the amount that they would have received had
the Proceeds been distributed to all Shareholders pro rata to their respective
holdings of Shares (this difference known as the "Shortfall Amount"). If there are
insufficient Proceeds to pay the Shortfall Amount to all Shareholders, the available
Proceeds shall be distributed pro rata to the respective aggregate Shortfall
Amounts.

In the event of an Asset Sale, the surplus assets of Monzo remaining after
payment of its liabilities shall be distributed among the Shareholders pro rata to
the number of Shares held.

(e) Voting Rights (Article 6)

All Shares carry a right to receive notice of and to attend, speak and vote at all
general meetings of Monzo and to receive and vote on proposed written
resolutions of Monzo. On a show of hands each Shareholder who is present in
person or by proxy shall have one vote, and on a poll each Shareholder so
present shall have one vote for each Share held by him. No voting rights may be
exercised in respect of any nil paid or partly paid Shares.

As a Crowdcube Investor, Crowdcube Nominee is the legal holder of the E

Ordinary Shares issued in connection with the Offer and, in accordance with the
Crowdcube Terms, Crowdcube will direct Crowdcube Nominee in accordance with
what Crowdcube deems, in its absolute discretion, to be in the best interests of
Crowdcube Investors as a whole. Where Crowdcube determines that a matter in
relation to the E Ordinary Shares, held by the Crowdcube Nominee for the
Crowdcube Investors, requires a decision to be made by Crowdcube Investors,
Crowdcube will use reasonable endeavours to notify Crowdcube Investors and
shall action such matter in accordance with the wishes of the majority of
responding Crowdcube Investors (measured by the number of E Ordinary Shares
beneficially held by such responding Crowdcube Investors).
 - 91 -

(f) Vesting Rights of Relevant Shares (Article 7)

Unless the Board and an Investor Majority determine otherwise, if at any time
during a pre-defined period for each of the Relevant Shareholders and Founders:

(i) a Relevant Shareholder ceases to be a Relevant Person for any reason

(other than by reason of being a Bad Leaver); or

(ii) a Founder ceases to be a Relevant Person by reason of their resignation

(except in circumstances where Monzo was entitled to dismiss them for
Cause);

they shall be deemed to have given a Transfer Notice in respect of a pre-defined

number of their Shares. The specific calculations for each shareholder's leaver's
percentage are included in the Articles.

(g) Consolidation (Article 8)

Whenever any Shareholders are entitled to fractions of a share, the Directors may
sell the shares representing the fractions for the best price reasonably obtainable
to any person or Monzo and distribute the net proceeds of sale in due proportion
among those Shareholders.

(h) Anti-dilution protection (Article 9)

Article 9 sets out anti-dilution protections for holders of A1 Ordinary Shares, A2

Ordinary Shares, B Ordinary Shares, C Ordinary Shares, D Ordinary Shares and
E Ordinary Shares which will apply where Monzo issues any New Securities at a
price per security which is less than the Starting Price for the relevant class of
Shares. In such a scenario, the protection under this article entitles the holders of
such class of Share to be issued a number of that class of Share to be determined
in accordance with the formula set out in the Articles. However, for each class of
Shares, the holders of more than 50% of that class of Share have the ability to
waive the right to Shares being issued pursuant to the relevant anti-dilution
provision.

If further Shares are issued to an investor pursuant to the anti-dilution protection

provisions for the relevant class of Shares, that investor is required to pay to
Monzo cash equal to the subscription price for the Shares being issued. For the
avoidance of doubt, Monzo is not required to make any payments itself, and there
will be no capitalisation of available reserves.

For Crowdcube Investors, the right to receive and waive any such rights will be
that of Crowdcube Nominee, as legal holder of the E Ordinary Shares, issued
pursuant to the Offer.

The Ordinary Shares resulting from the event of a Qualifying IPO (as detailed in
paragraph 4.2(k) of this Part VII) will not have anti-dilution protection and will in all
respects rank pari passu with the existing issued Ordinary Shares.

(i) Variation of class rights (Article 10)

The prior written consent of an Investor Majority and an Ordinary Majority are
required to vary or abrogate the special rights attached to classes of Shares, save
that such special rights attaching to A1 Ordinary Shares, A2 Ordinary Shares, B
Ordinary Shares, C Ordinary Shares, D Ordinary Shares or E Ordinary Shares
 - 92 -

can only be varied or abrogated with the prior written consent of more than 50% of
the holders of the relevant class.

The creation of a new class of shares which has preferential rights to one or more
existing classes of Shares does not constitute a variation of the rights of those
existing classes of Shares.

(j) Allotment of Shares (Article 11)

The pre-emption provisions set out in sections 561(1) and 562(1) to (5) (inclusive)
of the Act do not apply to an allotment of equity securities by Monzo.

Unless otherwise agreed by a Super Investor Majority and an Ordinary Majority, if

Monzo proposes to allot any New Securities, such New Securities must first be
offered to all Relevant Investors pari passu and pro rata to their existing
shareholdings and on the same terms and at the same price as the New
Securities are being offered to any other party.

The above paragraph on pre-emption provisions is subject to certain exclusions

as set out in Article 11.6, including not being applicable to E Ordinary Shares to
be issued to Crowdcube Nominee in connection with this Offer.

If Monzo allots New Securities but the above provisions are dis-applied with the
consent of the Super Investor Majority and Ordinary Majority, if an Investor is then
allocated any New Securities, each of the other Investors shall also have the right
to subscribe on the same terms and at the same price as those New Securities
are being offered to the Investor who subscribed for them in accordance with the
procedure described in the Articles.

(k) Conversion on IPO (Article 12)

All of the fully paid A1 Ordinary Shares, A2 Ordinary Shares, B Ordinary Shares,
C Ordinary Shares, D Ordinary Shares and E Ordinary Shares shall automatically
convert (on a 1:1 basis) into Ordinary Shares in the event of a Qualifying IPO.

In the event of a sub division or consolidation of the Ordinary Shares, the board
may adjust the conversion ratio in a manner which it sees to be fair and
reasonable. At the request of an Investor Majority or a dispute arises in
connection with an adjustment to the conversion ratio the matter shall be referred
to Monzo's auditors for final determination.

(l) Transfers of Shares and Pre-Emption Rights (Articles 13, 14, 15)

Shares may not be transferred unless such a transfer is in accordance with the
Articles. In the event that a transfer is made in breach of the Articles the transferor
will be deemed to have served a Transfer Notice in respect of their whole
shareholding in Monzo.

The Board may refuse to register a transfer of Shares in a number of situations,

including if:

(i) it is a transfer to a bankrupt, a minor or a person of unsound mind;

(ii) the transfer is to a current or prospective Director or employee who, in the

opinion of the Board, is subject to taxation in the United Kingdom and has
not entered into a joint s. 431 ITEPA election with Monzo;
 - 93 -

(iii) it is a transfer of a Share which is not fully paid to a person of whom the
Directors do not approve or on which Monzo has a lien;

(iv) the transfer is not lodged at the registered office or another place
nominated by the Directors;

(v) the transfer is not accompanied by the certificate for the Shares and such
other evidence that the Directors need;

(vi) the proposed transfer would result in an acquisition or increase of control

of Monzo and certain approvals have not been obtained; or

(vii) the transferee is a person (or nominee for a person) who the Board
determines to be a competitor (or an Associate of a competitor) of Monzo
or a Subsidiary Undertaking of Monzo.

Unless otherwise agreed by the Board with the consent of the Super Investor
Majority and the Ordinary Majority, before transferring any Shares in Monzo to a
third party who is not a Permitted Transferee, a Shareholder must first notify
Monzo of the number of Shares it intends to transfer; the proposed transferee;
and the proposed sale price. Monzo will then offer those Shares for sale on a pre-
emptive basis as follows:

(i) firstly, if the Sale Shares are held by a Founder or a Relevant

Shareholder (or a Permitted Transferee of such Founder or
Relevant Shareholder) to either an employee benefit trust established by
Monzo and/or to any other existing or new Monzo employee (in each case
subject to the necessary board and shareholder approvals (as the case
may be));

(ii) secondly, to all Relevant Investors; and

(iii) thirdly, with respect to Shares held by any Shareholder which is not a
Relevant Investor, to all Shareholders (other than the Relevant Investors).

If this offer is accepted, those Shares must be transferred in accordance with the
Articles.

If the pre-emption rights on transfer set out above are dis-applied by the Board
with the consent of the Super Investor Majority and the Ordinary Majority, if an
Investor is then allocated any of the Sale Shares, each of the other Investors shall
be entitled to 10 business days' notice from Monzo and have the right to purchase
a proportion of the Sale Shares being sold on the same terms and at the same
price as those Sale Shares are being purchased by the original Investor, in
accordance with the procedure described in the Articles.

Where a proposed transfer of Shares needs regulatory approval, the transfer will
need the prior written consent of the Board (not to be unreasonably withheld or
delayed).

The Directors may need a proposed transferee to execute and deliver to Monzo a
deed agreeing to be bound by the terms of any shareholders' agreement relating
to Monzo or similar document as a condition to the registration of the transfer of
any Shares (whether pursuant to a Permitted Transfer or otherwise but excluding
Permitted Transfer(s) by Crowdcube Nominee or a Crowdcube Investor).
 - 94 -

No transfer may be made to trustees of a Family Trust unless the Board is

satisfied:

(i) with the terms of trust deed and the trustees' powers;

(ii) with the identity of the proposed trustees;

(iii) the proposed transfer will not result in 50% or more of Monzo's equity
share capital being held by trustees of that or any other trusts; and

(iv) that no costs incurred in connection with the setting up or administration of

the trust are to be paid by Monzo.

Articles 13, 14 and 15 additionally provide, among other things, that:

(i) No Founder or Relevant Shareholder may transfer any Shares except with
the consent of an Investor Majority, pursuant to a Permitted Transfer,
where otherwise required to do so under the Articles or pursuant to
acceptance of an offer above a pre-set consideration value.

(ii) A Crowdcube Nominee shall not be entitled to transfer or dispose of any

interest in the Crowdcube Shares except pursuant to a Permitted Transfer,
with the consent of the Board or where required to do so pursuant to the
Articles or pursuant to acceptance of an offer above a pre-set
consideration and provided that in each case a Crowdcube Nominee
remains the holder of the legal title of all of the Crowdcube Shares. If such
a transfer is made by a Crowdcube Nominee, the transferee shall be
treated as a Crowdcube Nominee for all purposes under the Articles.

(iii) A Crowdcube Investor shall not be entitled to transfer or dispose of any

interest in the Crowdcube Shares held by them except with the consent of
the Board, pursuant to the Articles or where otherwise required to do so
under the Articles or pursuant to acceptance of an offer above a pre-set
consideration value.

(iv) In the event that the legal title to any Shares is held by a nominee on
behalf of any Shareholder, any offers, notices or communications required
to be made to such Shareholder pursuant to the Articles shall be deemed
satisfied, in respect of such Shares, by the provision of such offer, notice
or communication (as the case may be) to the relevant nominee. Any
response to such offer, notice or communication (as the case may be)
shall be validly made under the Articles by the nominee on behalf of the
relevant Shareholder and such response shall be binding on such relevant
Shareholder without the need to obtain further approval from them.

(v) The Board may require certain persons to provide Monzo with information
or evidence they need to determine whether there has been a transfer of
Shares in breach of the Articles. If satisfactory information or evidence is
not provided, or if the Board is reasonably satisfied that a breach has
occurred, the Board will immediately notify the holder of those Shares and
the Shares will cease to confer any rights to vote or receive dividends or
other distributions. The holder of those Shares may be required to transfer
some or all of those Shares to any person at a price that the Board
requires.
 - 95 -

(vi) Where a person legally or beneficially entitled to a deceased

Shareholder's Shares under their will or intestacy laws is a Permitted
Transferee, the legal representative of the deceased Shareholder may
transfer any Shares to that Permitted Transferee without restriction as to
price or otherwise.

(vii) If a Shareholder has transferred its Shares to a member of its group on the
basis that it is a Permitted Transferee, if that group member ceases to
form part of the original Shareholder's group, it must transfer those Shares
back to the original Shareholder or a member of the original Shareholder's
group without restriction as to price or otherwise.

(viii) Trustee(s) may transfer shares to a company the trustee(s) hold the whole
of the share capital of and which they control, or transfer shares to the
original Shareholder or to another Permitted Transferee of the original
Shareholder, or transfer shares to the new or remaining trustees upon a
change of trustee(s) without restrictions as to price or otherwise.

(ix) If a Shareholder has transferred its Shares to a spouse or civil partner on

the basis that it is a Permitted Transferee, if that person ceases to be the
original Shareholder's spouse of civil partner, they must transfer those
Shares back to the original Shareholder (or, to any Permitted Transferee
of the original Shareholder) or give a Transfer Notice to Monzo.

(x) On the death, bankruptcy, liquidation, administration or administrative

receivership of a Permitted Transferee, their personal representative,
trustee in bankruptcy, liquidator, administrator or administrative receiver
must transfer the Shares back to the original Shareholder if still living and
not bankrupt or in liquidation (or, if so directed by the original Shareholder,
to any Permitted Transferee of the original Shareholder) without restriction
as to price or otherwise. If the transfer is not executed and delivered in
accordance with the Articles or if the original Shareholder is no longer
living, or is bankrupt, in liquidation, administration or administrative
receivership, the personal representative, trustee in bankruptcy, liquidator,
administrator or administrative receiver will be deemed to have given a
Transfer Notice.

(m) Compulsory transfers (Article 17)

Article 17 sets out various circumstances in which Shareholders (or their

representatives) must compulsorily transfer their Shares (including on bankruptcy,
the appointment of a liquidator, administrator or administrative receiver, and if
subject to a change of control). Article 17 does not, however, apply to Crowdcube
Investors or Crowdcube Nominee.

(n) Mandatory offer on change of control (Article 18)

Except in the case of Permitted Transfers and transfers under Article 17, after
going through the pre-emption procedure in Article 15, if a Shareholder proposes
to transfer Shares in one or a series of related transactions (the "Proposed
Transaction") to one or more purchasers (each a "Proposed Purchaser") which
would result in any Proposed Purchaser (and Associates of the Proposed
Purchaser or persons acting in concert with the Proposed Purchaser) acquiring a
controlling interest in Monzo, that Shareholder must procure the making of an
offer above a pre-set consideration value to all other holders of Shares by the
 - 96 -

Proposed Purchaser to acquire all of the Shares for a consideration per Share the
value of which is at least equal to the sum of the highest price per Share offered
or paid by the Proposed Purchaser in the Proposed Transaction or in any related
or previous transaction by the Proposed Purchaser or any person acting in
concert with the Proposed Purchaser in the 12 months preceding the date of the
Proposed Transaction plus the "Relevant Sum"; Relevant Sum = C ÷ A, where:

A = number of Shares being sold in connection with the relevant Proposed

Transaction; and

C = any other consideration (in cash or otherwise) paid or payable by the

Proposed Purchaser or any other person acting in concert with the
Proposed Purchaser, which having regard to the substance of the
transaction as a whole, can reasonably be regarded as an addition to the
price paid or payable for the Shares.

(o) Co Sale Right (Article 19)

Except in the case of a Permitted Transfer and other than in respect of a Lead
Investor or Orange Digital Ventures, a Shareholder selling their Shares (a "Selling
Shareholder") shall give to each Shareholder who has not taken up their pre-
emptive rights under Article 15 (an "Equity Holder") not less than 15 business
days' notice in advance of the proposed sale which specifies the identity of the
proposed purchaser and the price per share they are proposing to pay, amongst
other things. The Equity Holder will then have five business days to notify the
Selling Shareholder that it wishes to sell a certain number of Shares at the
proposed sale price in accordance with the mechanism set out in the Articles (the
"Co-Sale Right").

In the event that a Super Investor Majority decides that the Co-Sale Right does
not apply to a particular sale by a Selling Shareholder and an Investor then
accepts an offer above a pre-set consideration value from the same buyer of the
shares in the original transfer, the other Investors shall be entitled to 10 business
days' notice from Monzo and have a right to sell a proportion of their shares on the
same terms by providing written intention within five business days' of the notice
from Monzo.

(p) Drag along rights (Article 20)

If an Ordinary Majority and an Investor Majority (to include a Series E Majority if

the proceeds of sale in respect of each E Ordinary Share in connection with the
Share Sale are not equal to or greater than the original purchase price of such E
Ordinary Share) (the "Drag Shareholders") wish to transfer all their interest in
shares to a proposed purchaser, then the Drag Shareholders shall have the option
to require all the other holders of Shares to sell and transfer all their Shares to the
proposed purchaser in accordance with the Articles.

In the event of a reorganisation in which a new holding company is incorporated,

as approved by the Board, an Ordinary Majority and an Investor Majority, the
Shareholders are required to take all actions to assist with such reorganisation,
including voting in support of the Board's plan of action and consenting to the sale
of their shares in return for new shares to be issued in the new holding company.
 - 97 -

(q) General Meetings and Proxies (Articles 21 and 22)

Article 21 supplements the procedures in the Act relating to the conduct of

business at general meetings of Monzo. If the Shareholders require the Directors
to call a general meeting in accordance with their rights under the Act, the
Directors must convene a meeting to take place within 28 days.

Shareholders may appoint a proxy to attend, speak or vote at general meetings on

their behalf. Proxy notices must be signed by or on behalf of the Shareholder and
accompanied by the authority under which it is signed.

(r) Number and Appointment of Directors (Article 23)

Unless determined by an ordinary resolution of the Shareholders with consent of

the Investor Majority, the number of directors of Monzo from time to time cannot
be less than two. Article 23 contains a right for certain Shareholders to appoint a
representative to the Board.

(s) Directors’ interests (Article 26)

Article 26 supplements the provisions of sections 175 and 182 of the Act by
setting out detailed provisions and examples regarding the declaration of
Directors' interests.

(t) Data Protection (Article 30)

Each Shareholder and Director consents to the processing of their personal data
by Monzo, the Shareholders and Directors for the purpose of due diligence
exercises, compliance, and the exchange of information among themselves.

5. CROWDCUBE NOMINEE ARRANGEMENT

The E Ordinary Shares issued pursuant to the Offer will be issued to Crowdcube
Nominee, which will hold the legal title to such Shares. Crowdcube Nominee will hold the
E Ordinary Shares issued pursuant to the Offer as nominee and will issue beneficiary
statements to each successful Applicant, who will hold the E Ordinary Shares as a
Crowdcube Investor.

In order to participate in the Offer, Crowdcube Investors must accept the Crowdcube
Investor Terms and must agree to the Representative Agreement that appoints
Crowdcube as their representative in respect of the E Ordinary Shares issued pursuant to
the Offer.

The Crowdcube Investor Terms set out the terms on which Crowdcube will administer the
E Ordinary Shares and will arrange for the E Ordinary Shares to be held by the
Crowdcube Nominee. In summary, the Crowdcube Investor Terms:

• obtain the Crowdcube Investor's consent for the E Ordinary Shares to be held by
the Crowdcube Nominee and incorporate the Representative Agreement;

• provide for the Crowdcube Investor to validate their account with Crowdcube, their
client categorisation under the regulatory regime, and identification requirements;

• set out the scope of the service provided by Crowdcube and the extent of
Crowdcube's liability in respect of that service;
 - 98 -

• set out the process by which the Crowdcube Investor can make a complaint or
raise a query; and

• obtain the Crowdcube Investor's consent to the use of their data and incorporate
the Crowdcube privacy policy.

Each of the Crowdcube Investors will be required to agree to the Representative

Agreement through the Monzo App, in order to subscribe for E Ordinary Shares in
connection with the Offer. Crowdcube will direct the actions of Crowdcube Nominee as
legal title holder of the E Ordinary Shares issued pursuant to the Offer. Under the
Representative Agreement:

• Crowdcube will direct the Crowdcube Nominee in accordance with what

Crowdcube deems, in its absolute discretion, to be in the best interests of
Crowdcube Investors as a whole. Where Crowdcube determines that a matter in
relation to the E Ordinary Shares, held by the Crowdcube Nominee for the
Crowdcube Investors, requires a decision to be made by Crowdcube Investors,
Crowdcube will use reasonable endeavours to notify Crowdcube Investors and
shall action such matter in accordance with the wishes of the majority of
responding Crowdcube Investors (measured by the number of E Ordinary Shares
beneficially held by such responding Crowdcube Investors). What this means in
practice is that Crowdcube will take all administrative decisions on behalf of
Crowdcube Investors. If Crowdcube believes that a decision needs to be made
by Crowdcube Investors collectively, then Crowdcube will provide all relevant
information and an explanation and will open a poll to Crowdcube Investors to
vote. For example, if Crowdcube Investors are being asked to vote in favour of an
amendment to Monzo's Articles of Association, Crowdcube would poll the
Crowdcube investors;

• each Crowdcube Investor agrees to owe Crowdcube Nominee any obligations

owed by Crowdcube Nominee in connection with any document which it enters
into on behalf of the Crowdcube Investor. Each Crowdcube Investor shall
indemnify Crowdcube and Crowdcube Nominee (and those acting on their behalf)
in respect of liabilities arising in connection with any document entered into by
Crowdcube Nominee on behalf of the Crowdcube Investor, unless such liabilities
result from Crowdcube's negligence or wilful misconduct;

• Crowdcube shall account to each Crowdcube Investor for all dividends or other
monies paid in respect of E Ordinary Shares held for that Crowdcube Investor,
where such amount is over £5.00 and the cost of payment does not outweigh the
Crowdcube Investor’s entitlement. Crowdcube shall pay such amounts to the
Crowdcube Investor's bank account. Where the Crowdcube Investor fails to
provide bank account details, moneys held for that Crowdcube Investor may be
donated to charity;

• on any transfer or further issue of shares in Monzo in respect of which the

Crowdcube Nominee holds pre-emption rights and these rights are not waived by
an action of Monzo, Crowdcube shall use reasonable endeavours to procure that
the Crowdcube Nominee’s pro-rata entitlement to such shares is made available
to Crowdcube Investors. Crowdcube may, however, instruct the Crowdcube
Nominee to waive such pre-emption rights where it determines, in its absolute
discretion, that such waiver is in the best interests of Crowdcube Investors as a
whole;
 - 99 -

• In the event that the Crowdcube Nominee is obliged by law or a provision of

Monzo’s Articles to transfer any E Ordinary Shares held by the Crowdcube
Nominee for the Crowdcube Investor, or if (in exceptionally limited circumstances)
Crowdcube determines that the transfer of any such shares is in the best interests
of the Crowdcube Investors as a whole, Crowdcube shall notify the Crowdcube
Investor in writing as soon as reasonably practicable and shall instruct the
Crowdcube Nominee to transfer the legal title to the relevant Crowdcube Shares
and sign all documents and take all actions necessary to affect such transfer and
each Crowdcube Investor authorises Crowdcube to take such action required to
transfer the beneficial title to the relevant Crowdcube Shares and to sign all
documents and take all actions necessary to affect such transfer without
conducting a poll. This may be, for example, where the majority of other
Shareholders have already agreed to sell their Shares at an attractive sale price
and where the buyer would not agree to Crowdcube conducting a poll of the
Crowdcube Investors due to some timing constraint or sensitivity. The purpose of
this provision is to try and protect Crowdcube Investors from missing out on an
exit opportunity in those highly limited circumstances. The Crowdcube Investors
would not have a right to refuse such a transfer in these situations. Crowdcube
may also transfer the E Ordinary Shares in accordance with the views of a
majority of responding Crowdcube Investors (measured by the number of E
Ordinary Shares beneficially held by such responding Crowdcube Investors);

• to the extent permitted by Monzo’s Articles, a Crowdcube Investor may transfer

beneficial title to Crowdcube Shares provided that the Crowdcube Investor notifies
Crowdcube and provides such information as Crowdcube requests, and that the
transferee is (or immediately on the completion of the transfer becomes) a
member of the Crowdcube platform and meets Crowdcube's anti-money
laundering checks;

• Crowdcube Investors agree to comply with Monzo's Articles and any other
relevant documents in connection with the E Ordinary Shares issued pursuant to
the Offer and held by the Crowdcube Nominee for such Crowdcube Investors, and
not to create any security interest in respect of the E Ordinary Shares issued
pursuant to the Offer and held by the Crowdcube Nominee for such Crowdcube
Investors. Each Crowdcube Investor agrees to indemnify Crowdcube and
Crowdcube Nominee (and those acting on their behalf) in respect of liabilities
arising in connection with acts or omissions of the Crowdcube Investor; and

• fees may be payable by the Crowdcube Investor in respect of the services

provided by Crowdcube and the Crowdcube Nominee under the Representative
Agreement.

• As Crowdcube Investors, pursuant to Monzo's Articles, the rights attaching to the

E Ordinary Shares issued pursuant to the Offer and held by the Crowdcube
Nominee for the Crowdcube Investors will vary from Existing Shareholders who
hold both legal and beneficial title to E Ordinary Shares. The summary of the
Articles included in section 4 of this Part VII provides details of these variations,
which include:

• that certain pre-emption provisions included in Article 11 (Allotment of Shares) do

not apply to Crowdcube Shares issued to Crowdcube Nominee;

• that pursuant to Article 13 (Transfers of Shares – General) Crowdcube Nominee

and each Crowdcube Investor shall not be entitled to transfer or dispose of any
 - 100 -

interest in the Crowdcube Shares or the beneficial interest in the Crowdcube

Shares held by them as applicable except with the consent of the Board, pursuant
to the Articles or where otherwise required to do so under the Articles or pursuant
to acceptance of an offer above a pre-set consideration value;

• that pursuant to Article 13 (Transfers of Shares – General) Crowdcube Nominee

and Crowdcube Investors are not required to agree to be bound by the terms of
any shareholders' agreement relating to Monzo with regard to Permitted
Transfer(s) by a Crowdcube Nominee or a Crowdcube Investor; and

• that the provisions of Article 17 (Compulsory transfers) do not apply to Crowdcube

Nominee or the Crowdcube Investors.

6. SIGNIFICANT SHAREHOLDINGS

As at the Latest Practicable Date, save as disclosed in Part V of this document in respect
of Directors’ interests, Monzo had been notified of the following persons who were or will
be directly or indirectly interested in three per cent. or more of the existing issued share
capital of Monzo7:

Person Number Number of Number Number Number of Number of Number of % of

of A1 of A2 of B C D E issued
Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary share
Shares Shares Shares Shares Shares Shares Shares capital
Passion 10,016,600 9,740,892 6,203,955 4,971,167 5,028,681 1,862,726 32.02%
Capital

Thrive 12,925,035 2,634,008 1,296,260 14.27%a

General 4,545,984 3.85%b

Catalyst
Stripe 10,532,122 905,417 9.68%

Paul 6,792,562 5.75%

Rippon
Goodwater 4,832,089 448,506 4.47%
Capital

The 5,092,081 4.31%

Crankstart
Foundation

Crowdcube 1,935,718 2,381,351 372,608 3.97%

Nominees
Limited as
nominee
for the
Crowdcube
Investors

Accel 4,446,172 3.76%

a
Thrive is indirectly interested in a further 0.15% of Monzo's Shares through its shareholdings in another Monzo
shareholder.
b
General Catalyst is indirectly interested in a further 0.79% of Monzo's Shares through its shareholdings in another Monzo
shareholder.

The Shares held by the Shareholders set out above all have the same voting rights per
security.

7
For the purpose of this table, figures assume that all transfers of Ordinary Shares and their re-designation as E Ordinary Shares in
connection with the Series E Investment Round have completed (completion is pending receipt of stamped stock transfer forms from
HMRC).
 - 101 -

As at the Latest Practicable Date (prior to the publication of this document), Monzo was
not aware of any person or persons who, directly or indirectly, jointly or severally, exercise
or could exercise control over Monzo.

Monzo is not aware of any arrangements the operation of which may, at a subsequent
date, result in a change of control of Monzo.

7. PRINCIPAL SUBSIDIARIES

Monzo has one subsidiary: Monzo Support US, a Delaware corporation which was
incorporated under the laws of the State of Delaware, United States on 18 September
2018 and was qualified to do business in the State of Nevada, United States, on 20
September 2018. The address of Monzo Support US's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801, United States.

Monzo has no joint ventures, or associates.

8. MONZO EMPLOYEE SHARE PLANS

There are three Monzo Employee Share Plans for the benefit of certain employees,
Directors and the Proposed Director.

The first is the CSOP, under which awards can be made to employees subject to certain
conditions. The strike price for these options is set according to the fair market share price
at the time of issue as agreed with HMRC.

The second is the Unapproved Plan, under which awards are made with the strike price
set equal to £0.00001 per share. For both Monzo Employee Share Plans, 25% of the
options typically vest at the end of the first year of employment. The remainder vest
evenly over the next three years. The total expense connected with the Monzo Employee
Share Plans in 2018 was £916k (2017: £294k).

The third is the iNED Equity Participation Scheme, under which the Independent Non-
Executive Directors are permitted to subscribe for Ordinary Shares, at market value at the
time of purchase. This would be a personal investment choice (on a voluntary basis) up to
an amount equivalent to their agreed pro rata annual fee for the relevant period. None of
the Independent Non-Executive Director would be permitted to: (i) acquire any shares in
Monzo outside of the iNED Equity Participation Scheme, or (ii) hold more than 0.5% of the
as-issued share capital of Monzo. In order to maintain their independence the
Independent Non-Executive Directors are also not entitled to any option grants under the
iNED Equity Participation Scheme.

Save as set out in paragraph 2.1 of Part V, as at the Latest Practicable Date, no Director
or Proposed Director has any options over Shares under the Monzo Employee Share
Plans.

9. PROPERTY, PLANT AND EQUIPMENT

Monzo is not aware of any environmental issues that may affect its utilisation of fixed
assets.

10. LITIGATION

Save as set out below, there are no governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which Monzo is
 - 102 -

aware) during the 12 months preceding the date of this document which may have, or
have had in the recent past a significant effect on Monzo and/or the Group’s financial
position or profitability.

Monedo Dispute

Monzo, originally called "Mondo", rebranded to its current name following a copyright
dispute with Monedo, a unit of the Hamburg-based company, Kreditech Holding SSL
GmbH ("Kreditech") in 2015. The dispute was subsequently resolved in June 2016 and
Monzo entered into a Trade Mark Purchase and Assignment Agreement with Kreditech
on 9 June 2016 under which it sold the "MONDO" trade mark (UK trade mark no.
3107527) and associated domain names to Kreditech for €10,000. Monzo was permitted
to some limited and temporary continued use of the "MONDO" trade mark and associated
domain names for the purposes of phasing out the use of the trade mark and rebranding
to Monzo. The trademark assignment form was filed with UKIPO on 27 July 2018. An
amendment agreement was signed on 21 September 2017 allowing Monzo to continue to
use the getmondo.co.uk domain name for non-public purposes for a period of one year
from the date of the amendment agreement, due to technical constraints experienced by
Monzo. Monzo has ceased all other use of the "MONDO" trade mark and associated
domain names. Monzo has switched over to an api.monzo.com domain during this
extension period and the only remaining use of “getmondo.co.uk” is the receipt by
employees of Monzo - who were employees when “getmondo.co.uk” was active - of email
communications.

11. MATERIAL CONTRACTS

The following contracts, not being contracts entered into in the ordinary course of
business, are all of the contracts which have been entered into by Monzo in the previous
two years and which are, or may be, material, or have been entered into by Monzo and
contain provisions under which Monzo has obligations or entitlements which are material
to it at the date of this document. None of Crowdcube, Crowdcube Nominee or the
Crowdcube Investors are a party to any of the contracts detailed in this section 11 and so
none of these rights are available to Crowdcube Investors.

11.1 Series C Investment Round

(a) Management Rights Letter dated 23 February 2017 between: (1) Thrive
Capital Partners V, L.P.; and (2) Monzo: Due to the nature of Thrive Capital
Partners V, L.P. (as a US fund), Monzo provides certain additional information,
inspection and representation rights to Thrive Capital Partners V, L.P to enable it
to monitor its investment in Monzo, including the ability to examine the books and
records of Monzo, inspect facilities at Monzo, the right of Thrive Capital Partners
V, L.P to be represented on the Board (to the extent it is not already represented)
in order to consult with management and the requirement on Monzo to review its
tax status and elections at least annually.

(b) Investment Agreement dated 23 February 2017 between (1) Passion Capital;
(2) Thrive; (3) the Founders (as defined therein); (4) the Existing
Shareholders (as defined therein); (5) Orange Digital Ventures; and (6)
Monzo: Passion Capital, Thrive, Orange Digital Ventures, Tom Odell and the
Kevin Systrom Revocable Trust subscribed for an aggregate 19,526,746 Ordinary
Shares for an aggregate subscription amount of £19,640,001.14 at a price per
share of £1.0058. Such Ordinary Shares were later re-designated as an equal
number of C Ordinary Shares on 3 November 2017. Monzo provided warranties to
the Series C Investors as at 23 February 2017 in respect of Monzo, on terms
 - 103 -

typical to this type of agreement. The agreement also included provisions

governing the relationship between the shareholders (other than Crowdcube
Nominee) and Monzo, in replacement of the previous investment agreement
dated 27 October 2016, including in respect of the composition of the Board,
information rights of the investors, consent matters held by certain investors,
undertakings by Monzo, restrictive covenants applicable to each of Tom Blomfield,
Gary Dolman and Paul Rippon and confidentiality obligations applicable to all
parties, in each case typical to this type of agreement. The agreement is governed
by English law.

11.2 Series D Investment Round

(a) Subscription Agreement dated 3 November 2017 between: (1) Series D

Investors (as defined therein); (2) the Founders (as defined therein); and (3)
Monzo, as varied on 8 November 2017 and then amended and restated pursuant
to an Amended and Restated Subscription Agreement dated 12 December 2017:
Stripe, Goodwater Capital, Thrive, The Loud Hound Foundation, The Crankstart
Foundation, The Kelson Foundation, the Kevin Systrom Revocable Trust and
Orange Digital Ventures subscribed for an aggregate 24,797,125 D Ordinary
Shares for an aggregate subscription amount of £58,436,904.85 at a price per
share of £2.3566. Monzo provided warranties to the Series D Investors as at 3
November 2017 in respect of Monzo, on terms typical to this type of agreement.
The agreement is governed by English law.

(b) Shareholders' Agreement dated 3 November 2017 between: (1) the Investors
(as defined therein); (2) the Founders (as defined therein); (3) the Existing
Shareholders (as defined therein); and (4) Monzo: This agreement included
provisions governing the relationship between the shareholders (other than
Crowdcube Nominee) and Monzo, in replacement of the previous investment
agreement dated 23 February 2017, including in respect of the composition of the
Board, information rights of the investors, consent matters held by certain
investors, undertakings by Monzo, restrictive covenants applicable to each of Tom
Blomfield, Gary Dolman and Paul Rippon and confidentiality obligations applicable
to all parties, in each case typical to this type of agreement. The agreement is
governed by English law.

(c) Registration Rights Agreement dated 3 November 2017 between: (1) the
Investors (as defined therein); and (2) Monzo: It was agreed that, in the event
of an initial public offering of Monzo's shares on a US stock exchange, each of
Passion Capital, Stripe, Goodwater Capital, Thrive, The Loud Hound Foundation,
The Crankstart Foundation, The Kelson Foundation and Orange Digital Ventures
are entitled to the registration rights set out in this agreement typical to this type of
transaction, including two demand registration rights commencing six months after
Monzo's initial public offering, shelf and piggy back registrations on registrations
by Monzo and all expenses of registration and one counsel (jointly appointed by
the investors) to be payable by Monzo. The agreement is governed by the laws of
the State of New York, US.

(d) Management Rights Letters dated 3 November 2017 between: Monzo; and
each of Stripe and Goodwater Capital: due to the nature of Stripe and
Goodwater Capital (as US investors), Monzo provides certain additional
information, inspection and representation rights to them to enable them to
monitor their investments in Monzo, including standard information rights, the
ability to examine the books and records of Monzo and inspect facilities at Monzo
 - 104 -

and to allow Stripe and Goodwater Capital to each be represented on the Board
(to the extent they are not already represented) in order to consult with
management.

(e) US Securities Side Letters dated 3 November 2017 between: Monzo and
each of Thrive, Stripe, Goodwater Capital, The Loud Hound Foundation, The
Crankstart Foundation, The Kelson Foundation and the Kevin Systrom
Revocable Trust: For US securities laws purposes, each of the US-based
investors on the Series D Investment Round that subscribed for D Ordinary
Shares pursuant to the Subscription Agreement noted above acknowledged and
warranted the treatment of the D Ordinary Shares acquired on the Series D
Investment Round as shares that have not been registered under US securities
laws. The letters are governed by English law.

(f) Sale and Purchase Agreement dated 3 November 2017 between: (1) Passion
Capital; (2) the Sellers (as defined therein); and (3) Monzo: Passion Capital
purchased an aggregate 4,940,713 Ordinary Shares for an aggregate amount of
£11,643,284.28 from existing individual shareholders at a price per share of
£2.3566. Such Ordinary Shares were immediately re-designated into D Ordinary
Shares on completion of such transfers. Each selling shareholder provided
warranties to Passion Capital relating to title and capacity on the shares and
financial promotions as at 3 November 2017 typical to this type of agreement. The
agreement is governed by English law.

(g) Side Letter dated 3 November 2017 between: (1) Monzo; and (2) Stripe: Due
to the nature of Stripe's business, Stripe and Monzo agreed certain mechanics
and restrictions around information flow from Monzo to Stripe, supplemental to the
Shareholders' Agreement dated 3 November 2017 as referred to above. The letter
is governed by English law.

(h) Observer Appointment Letters dated 3 November 2017 between Monzo and
each of the board observers appointed by Stripe and Goodwater Capital:
Non-voting board observers appointed by Stripe and Goodwater Capital agreed
the terms of their appointment, including notice and attendance at board meetings
of Monzo, reimbursement of reasonable costs and out of pocket expenses for
attending meetings, information flow to them from Monzo on a similar basis to
other board members and standard provisions around confidentiality. The letters
are governed by English law.

11.3 Series E Investment Round

(a) Subscription Agreement dated 29 October 2018 between: (1) Series E

Investors (as defined therein); (2) the Founders (as defined therein); and (3)
Monzo: General Catalyst, Accel, Stripe, Goodwater Capital, Thrive and Orange
Digital Ventures subscribed for an aggregate 11,018,215 E Ordinary Shares for an
aggregate subscription amount of £85,000,019.68 at a price per share of £7.7145.
Monzo provided warranties to the Series E Investors as at 29 October 2018 in
respect of Monzo, on terms typical to this type of agreement. The agreement is
governed by English law.

(b) Shareholders' Agreement dated 29 October 2018 between: (1) the Investors
(as defined therein); (2) the Founders (as defined therein); (3) the Existing
Shareholders (as defined therein); and (4) Monzo: This agreement includes
provisions governing the relationship between the shareholders (other than the
Crowdcube Nominee and a few minority option holders that have exercised their
 - 105 -

options) and Monzo, in replacement of the previous investment agreement dated

3 November 2017. In particular, provisions are included in respect of: (i) options
over shares subject to a maximum option pool (such options granted at the
discretion of the Board), (ii) composition of the Board (with a mixture of two
founder directors, two investor directors and three independent non-executive
directors, as mentioned elsewhere in this Prospectus), (iii) information rights of the
investors (including monthly and annual accounts and annual budgets and
forecasts relating to Monzo), (iv) consent matters held by certain investors in
respect of key business, operational, exit and share class matters (both acting
together as an Investor Majority but also as majorities of A1 Ordinary Shares, A2
Ordinary Shares, B Ordinary Shares, C Ordinary Shares, D Ordinary Shares or E
Ordinary Shares (as separate classes) held by some of the investors), (v)
business undertakings by Monzo (to promote the best interests of Monzo and
promote good corporate governance), (vi) restrictive covenants applicable to each
of the Founders (including non-compete and non-solicitation undertakings for a
certain period of time) and (vii) confidentiality obligations applicable to all
parties to the agreement in respect of confidential information relating to Monzo, in
each case in a form that is typical to this type of agreement. The agreement is
governed by English law.

(c) Registration Rights Agreement dated 29 October 2018 between: (1) the
Investors (as defined therein); and (2) Monzo: It is agreed that, in the event of
an initial public offering of Monzo's shares on a US stock exchange, each of
Passion Capital, Stripe, Goodwater Capital, Thrive, The Loud Hound Foundation,
The Crankstart Foundation, The Kelson Foundation, Orange Digital Ventures,
Accel, General Catalyst and other investors as set forth therein are entitled to the
registration rights set out in this agreement typical to this type of transaction,
including two demand registration rights commencing six months after Monzo's
initial public offering, shelf and piggy back registrations on registrations by Monzo
and all expenses of registration and one counsel (jointly appointed by the
investors) to be payable by Monzo. The agreement replaces the previous
registration rights agreement dated 3 November 2017. The agreement is
governed by the laws of the State of New York, US.

(d) Management Rights Letter dated 29 October 2018 between: Monzo; and
each of Accel Growth Fund IV L.P., Accel London V L.P. and General
Catalyst: Due to the nature of Accel Growth Fund IV L.P., Accel London V L.P.
and General Catalyst (as US investors), Monzo provides certain additional
information, inspection and representation rights to them to enable them to
monitor their investments in Monzo, including the right to consult with
management of Monzo, the ability to examine the books and records of Monzo
and inspect facilities at Monzo at reasonable times and to allow Accel and
General Catalyst to each be represented on the Board (to the extent it is not
already represented) to consult with management.

(e) US Securities Side Letters dated 29 October 2018 between: Monzo and each
of Accel, General Catalyst, Thrive, Stripe, Goodwater Capital, the Kevin
Systrom Revocable Trust, and other US-based investors: For US securities
laws purposes, each of the US-based investors on the Series E Investment Round
that subscribed for E Ordinary Shares pursuant to the Subscription Agreement
noted above acknowledged and warranted the treatment of the E Ordinary Shares
acquired on the Series E Investment Round as shares that have not been
registered under US securities laws. The letters are governed by English law.
 - 106 -

(f) Sale and Purchase Agreements dated 29 October 2018 between: (1) the
Series E Buyers (as defined therein); (2) the Sellers (as defined therein); and
(3) Monzo: The Series E Buyers purchased an aggregate 2,810,913 Ordinary
Shares for an aggregate amount of £21,684,788.95 from existing individual
shareholders at a price per share of £7.7145. Such Ordinary Shares will be
immediately re-designated into E Ordinary Shares on completion of such
transfers8. Each selling shareholder provided warranties to the Series E Buyers
relating to title and capacity on the shares and financial promotions as at 29
October 2018 typical to this type of agreement. The agreements are governed by
English law.

(g) Observer Appointment Letters dated 29 October 2018 between Monzo and
each of the board observers appointed by Accel and General Catalyst: Non-
voting board observers appointed by Accel and General Catalyst agreed the terms
of their appointment, including notice and attendance at board meetings of Monzo,
reimbursement of reasonable costs and out of pocket expenses for attending
meetings, information flow to them from Monzo on a similar basis to other board
members and standard provisions around confidentiality. The letters are governed
by English law.

12. CAPITALISATION AND INDEBTEDNESS

The following table sets out Monzo’s capitalisation and indebtedness as at 28 February
2018 being the most recent published accounts and as at 30 September 2018, extracted
from the most recently available management accounts, produced internally and
unaudited.

As at 28 February 2018 As at 30 September

Audited 2018
£‘000 Un-Audited
£‘000

Shareholders’ Equity

Share Premium 93,989 94,247

Other Reserves 871 1,235

Total Shareholders’ Equity 94,860 95,482

Current Debt

Guaranteed n/a n/a

Secured n/a n/a

Unguaranteed / Unsecured n/a n/a

Total Current Debt n/a n/a

Non-Current Debt

8
Pending receipt of stamped stock transfer forms from HMRC.
 - 107 -

Guaranteed n/a n/a

Secured n/a n/a

Unguaranteed / Unsecured n/a n/a

Total Non-Current Debt n/a n/a

In October 2018, Monzo issued a further 11,018,215 E Ordinary Shares valued at

£7.7145 per share, bringing total Share Premium to £178,754,916.28.

Monzo does not classify customer deposits as indebtedness as holding customer

deposits is part of Monzo's core business operations. Aside from this, Monzo does not
hold any current or non-current indebtedness.

The following table sets out Monzo’s net indebtedness as at 28 February 2018 being the
most recent published accounts and as at 30 September 2018, extracted from the most
recently available management accounts, produced internally and unaudited.

As at 28 February 2018 As at 30 September

Audited 2018
£‘000 Un-Audited
£‘000

Liquidity

Cash and Cash Equivalents 96,943 286,950

Total Liquidity 96,943 286,950

Current Financial Debt n/a n/a

Net Current Financial Indebtedness 96,943 286,950

Non-Current Financial Debt n/a n/a

Net Non-Current Financial Indebtedness 96,943 286,950

Net Financial Indebtedness 96,943 286,950

13. AUTHORITY TO ALLOT THE SHARES

On 29 October 2018, pursuant to article 11.6(f) of the Articles, pre-emption rights set out
in the Articles were dis-applied in respect of the Offer.

The new E Ordinary Shares will be allotted in accordance with the Act.

14. RELATED PARTY TRANSACTIONS

Save as is disclosed in the financial information for the financial years ended 28 February
2017 and 28 February 2018, Monzo has not entered into any related party transactions
 - 108 -

with any related party during the financial years ended 28 February 2017 and 28 February
2018 and during the period between 28 February 2018 and the Latest Practicable Date.

15. WORKING CAPITAL

Monzo is of the opinion that the working capital available to the Group is sufficient for its
present requirements, that is, for at least 12 months following the date of publication of
this document.

16. SIGNIFICANT CHANGE

Save as for the equity raises set out at Part III (B), paragraph 1, of this document, there
has been no significant change in the trading or financial position of the Group since 28
February 2018, the end of the last financial period of Monzo for which financial
information was prepared.

17. GENERAL

17.1 Existing Shareholders who do not participate in the Offer may have their percentage
holding in Monzo diluted on the issue of new Shares. If 2,592,520 E Ordinary Shares are
issued pursuant to the Offer (being the maximum number of E Ordinary Shares to be
issued under the Offer) and none of the Existing Shareholders participate in the Offer, the
holdings of the Existing Shareholders will be diluted by approximately 2.15%.

17.2 The total costs, charges and expense payable by Monzo in connection with the Offer are
estimated to be £800,000.

17.3 None of the E Ordinary Shares being offered will be the object of an application for
admission to trading on the London Stock Exchange's AIM Market, the Main Market for
listed securities of the London Stock Exchange or any other stock exchange or trading
platform.

17.4 The auditor of Monzo is Ernst & Young LLP, whose address is at 25 Churchill Place,
Canary Wharf, London, E14 5EY, and who is registered to carry out audit work by the
Institute of Chartered Accountants in England and Wales. Ernst & Young LLP was the
auditor of Monzo for the period covered by the historical financial information included in
Part IV of this document.

18. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business
hours on any weekday (Saturdays, Sundays and public holidays excepted) at the
registered office of Monzo at 38 Finsbury Square and 31, 33 and 35 Wilson Street,
London EC2A 1PX and at the offices of Hogan Lovells International LLP at Atlantic
House, Holborn Viaduct, London EC1A 2FG from the date of this document until the
closing date of the Offer:

(a) the Articles;

(b) the annual reports and accounts of Monzo for the two financial years ended 28
February 2017 and 28 February 2018; and

(c) this document.

26 November 2018
 - 109 -

PART VIII
DEFINITIONS

The definitions set out below apply throughout this document, unless the context requires
otherwise.

"A1 Ordinary Shares" the class A1 Ordinary shares in Monzo with a nominal
value of £0.0000001 each and an aggregate nominal
value of £1.00166;

"A2 Ordinary Shares" the class A2 Ordinary shares in Monzo with a nominal
value of £0.0000001 each and an aggregate nominal
value of £1.167661;

"Accel" Accel London V L.P., Accel London V Strategic Partners

L.P., Accel London Investors 2016 L.P., Accel Growth
Fund IV L.P., Accel Growth Fund IV Strategic Partners
L.P. and Accel Growth Fund Investors 2016 L.L.C.;

"Act" Companies Act 2006, as amended, modified or re-

enacted from time to time;

"Active Customer" Monzo customers who have performed a financial

transaction in the last rolling 7 days;

"Applicant" a Phase 1 Applicant or a Phase 2 Applicant;

"Application" an application to invest and subscribe for E Ordinary

Shares through the Monzo App;

"Articles of Association" or the articles of association of Monzo, as amended or

"Articles" superseded, from time to time;

"Asset Sale" the sale, lease, transfer, exclusive licence or other

disposition by Monzo of all or substantially all of its
undertaking and assets (where disposal may include,
without limitation, the grant by Monzo of an exclusive
licence of intellectual property not entered into in the
ordinary course of business);

"Associate" in relation to any person means:

(a) any person who is an associate of that person and the

question of whether a person is an associate of
another is to be determined in accordance with
section 435 of the Insolvency Act 1986 (whether or
not an associate as so determined);

(b) any member of the same group; or

(c) any member of the same fund group (i.e. if the

Shareholder is a fund, partnership, company,
syndicate or other entity whose business is managed
by a fund manager);

"Audit Committee" the audit committee of the Board which currently

comprises of Tim Brooke (Committee Chairman), Amy
 - 110 -

Kirk and Keith Woollard;

"B Ordinary Shares" the class B Ordinary shares in Monzo with a nominal
value of £0.0000001 each and an aggregate nominal
value of £0.6203955;

"Bad Leaver" a Founder or Relevant Shareholder who ceases to be a

Relevant Person at any time by reason of dismissal by
Monzo for Cause or resignation as a Relevant Person in
circumstances where Monzo was entitled to dismiss such
Founder or Relevant Shareholder (as the case may be)
for Cause;

"Basel IV" changes to the Basel III reforms proposed by the Basel
Committee on Banking Supervision (BCBS), commonly
referred to as Basel IV;

"Board" the board of directors of Monzo from time to time;

"Business Day" or "business day" any day on which banks are generally open in London for
the transaction of business other than a Saturday or
Sunday or public holiday;

"C Ordinary Shares" the class C Ordinary shares in Monzo with a nominal
value of £0.0000001 each and an aggregate nominal
value of £2.1908097;

"Cause" (a) gross misconduct or a material or repudiatory

breach of the terms of an employment agreement
or consultancy agreement or engagement (as the
case may be), including any material breach of
obligations to Monzo concerning confidentiality or
intellectual property or non-compliance with non-
compete obligations applicable under the terms of
the employment agreement or consultancy
agreement or engagement (as the case may be);

(b) fraud or acts of dishonesty;

(c) being convicted of any criminal offence (other than

a road traffic offence which is not punishable by a
custodial sentence);

(d) the refusal or failure to substantially perform

duties and responsibilities to Monzo lawfully
prescribed by the Board after reasonable notice of
such failure and a reasonable opportunity to cure
such failure; or

(e) any act or omission (whether or not in the course

of employment or engagement) which causes
material damage to Monzo's business reputation;

"CET1" Common Equity Tier 1;

"CGT" capital gains tax or corporation tax on chargeable gains

(as applicable);

"Company" Monzo Bank Limited;

 - 111 -

"Contribution Margin" the excess of marginal revenue over marginal cost.

Marginal revenue consists of revenue through
interchange, overdraft and lending revenue and market
place fees. Marginal costs are derived from payment
scheme fees, fraud, financial crime and bad debt costs
and the staff costs of serving the customer. Fixed and
semi fixed overhead costs such as premises and IT
suppliers are excluded;

"Crowdcube" Crowdcube Capital Ltd, an online crowdfunding platform;

"Crowdcube Investor Terms" the terms entered into between Crowdcube and each
Crowdcube Investor in relation to the administration by
Crowdcube of the Crowdcube Shares held for that
Crowdcube Investor;

"Crowdcube Investors" the owners of the beneficial title to the Crowdcube Shares
from time to time;

“Crowdcube Nominee” the owner of the legal title to the Crowdcube Shares from
time to time, being Crowdcube Nominees Limited as at 26
November 2018;

"Crowdcube Shares" all Shares issued to Crowdcube Nominee (beneficially

owned by the Crowdcube Investors);

"Crowdcube Terms" the Crowdcube Investor Terms and the Representative

Agreement;

"CSOP" the Monzo share option plan under which the grant price
for share options has been approved by HMRC;

"D Ordinary Shares" the class D Ordinary shares in Monzo with a nominal
value of £0.0000001 each and an aggregate nominal
value of £3.0110446;

"Director" one of the Directors as the context applies;

"Directors" the directors of Monzo at the date of this document;

"E Ordinary Shares" the class E Ordinary shares in Monzo with a nominal
value of £0.0000001 each and an aggregate nominal
value of £1.38291289;

"Eligible Monzo Customer" the Offer will only be open to individuals who as at the
date of this document:

(a) have been approved as customers by Monzo

having completed the new customer application
process via the Monzo App, including, for the
avoidance of doubt, Monzo customers who have
not yet activated their debit card;

(b) are 18 years old or older; and

(c) are resident in the United Kingdom.

9
This includes certain Ordinary Shares that are in the process of being re-designated as E Ordinary Shares following completion of the
Series E Investment Round (completion is pending receipt of stamped stock transfer forms from HMRC).
 - 112 -

"EU" the European Union;

"European Commission" the European Commission of the EU;

"Excluded Shareholder" any Shareholder who at any time has been a director,
officer or employee of, or a consultant to, a Group
Company but who, on the date that a consent by the
Ordinary Majority is given, has ceased, or has given or
been given notice to terminate his position as a director,
officer or employee of, or a consultant to, a Group
Company in circumstances where he will not continue to
be a director, officer or employee of, or a consultant to,
any other Group Company following such termination;

"Executive Committee" the executive committee of the Board;

"Executive Directors" the executive directors of Monzo from time to time, which
at the date of this document are Tom Blomfield and Gary
Dolman;

"Existing Crowdcube Investors" Shareholders who have participated in a Monzo crowd

fundraising round and hold their Crowdcube Shares
through Crowdcube Nominee as at the date of this
Prospectus;

"Existing Shareholders" the holders of Existing Shares;

"Existing Shares" Shares that are in issue as at the date of this Prospectus;

"Family Trust" as regards any particular individual member or deceased

or former individual member, trusts (whether arising under
a settlement, declaration of trust or other instrument by
whomsoever or wheresoever made or under a
testamentary disposition or on an intestacy) under which
no immediate beneficial interest in any of the shares in
question is for the time being vested in any person other
than the individual and/or privileged relations (spouse,
civil partner, child or grandchild (including step or adopted
or illegitimate child and their issue)) of that individual; and
so that for this purpose a person shall be considered to be
beneficially interested in a share if such share or the
income thereof is liable to be transferred or paid or
applied or appointed to or for the benefit of such person or
any voting or other rights attaching thereto are exercisable
by or as directed by such person pursuant to the terms of
the relevant trusts or in consequence of an exercise of a
power or discretion conferred thereby on any person or
persons;

"FCA Handbook" The Financial Conduct Authority’s handbook of rules and

guidance;

"FCA" or "Financial Conduct the Financial Conduct Authority of the United Kingdom or
Authority" any predecessor or successor body or bodies carrying out
the functions currently carried out by the Financial
Conduct Authority;
 - 113 -

"FSMA" the Financial Services and Markets Act 2000, as

amended;

"Foundations" The Crankstart Foundation, The Kelson Foundation and

The Loud Hound Foundation;

"Founder" any of the following as the context applies: Tom Blomfield,

Gary Dolman, Jonas Huckestein or Paul Rippon;

"Founders" Tom Blomfield, Gary Dolman, Jonas Huckestein and Paul

Rippon;

"Fund Manager" a person whose principal business is to make, manage or

advise upon investments in securities;
"General Catalyst" General Catalyst Group IX, L.P. and GC Entrepreneurs
Fund IX, L.P.;

"Goodwater Capital" Goodwater Capital II, L.P.;

"Group" Monzo and Monzo Support US;

"Group Company" one of the Company and its Subsidiary Undertaking(s) (if
any) from time to time;

"HMRC" HM Revenue & Customs;

"ICAAP" Internal Capital Adequacy Assessment Process;

"IFRS" International Financial Reporting Standards as adopted

for use by the EU;

"ILAAP" Internal Liquidity Adequacy Assessment Process;

"Independent Non-Executive the independent non-executive directors of Monzo from

Directors" time to time, which at the date of this document are Amy
Kirk, Tim Brooke and Keith Woollard;

"iNED Equity Participation Monzo's independent executive director equity

Scheme" participation scheme;

"Investor Directors" The investor directors of Monzo from time to time, which
at the date of this document are Eileen Burbidge and
Miles Grimshaw;

"Investors" Stripe; The Crankstart Foundation, The Kelson

Foundation and The Loud Hound Foundation; Goodwater
Capital; Orange Digital Ventures; Passion Capital; Thrive;
General Catalyst; and Accel;

"Investor Majority" the holders of more than 50% of the Shares held by the
Investors;

"IP" intellectual property;

"IPO" the admission of all or any of the Shares or securities

representing those shares (including without limitation
depositary interests, American depositary receipts,
American depositary shares and/or other instruments) on
NASDAQ or the New York Stock Exchange or the Official
List of the United Kingdom Listing Authority or the AIM
 - 114 -

Market operated by the London Stock Exchange Plc or

any other recognised investment exchange (as defined in
section 285 of the Financial Services and Markets Act
2000);

"ISA" Individual savings account;

"IT" information technology;

"ITEPA" Income Tax (Earnings and Pensions) Act 2003;

"Latest Practicable Date" 24 November 2018, being the latest practicable date prior
to publication of this document;

"Lead Investors" Stripe, Goodwater Capital, Passion Capital, Thrive,

General Catalyst and Accel;

"member of the same fund group" if a Shareholder is a fund, partnership, company,

syndicate or other entity whose business is managed by a
Fund Manager (an "Investment Fund") or a nominee of
that person:

(a) any participant or partner in or member of any

such Investment Fund or the holders of any unit
trust which is a participant or partner in or member
of any Investment Fund (but only in connection
with the dissolution of the Investment Fund or,
other than in respect of an Investment Fund that is
a body corporate, any distribution of assets of the
Investment Fund pursuant to the operation of the
Investment Fund in the ordinary course of
business);

(b) any Investment Fund managed by that Fund

Manager;

(c) any Parent Undertaking or Subsidiary Undertaking

of that Fund Manager, or any Subsidiary
Undertaking of any Parent Undertaking of that
Fund Manager; or

(d) any trustee, nominee or custodian of such

Investment Fund and vice versa;
"member of the same group" as regards any company, a company which is from time to
time a Parent Undertaking or a Subsidiary Undertaking of
that company or a Subsidiary Undertaking of any such
Parent Undertaking;
"Michael Moritz" Michael Moritz investing through the following charitable
investment vehicles: The Crankstart Foundation, The
Kelson Foundation and The Loud Hound Foundation;

"Money Laundering Regulations" the Money Laundering Regulations 2007, as amended;

"Monzo" Monzo Bank Limited;

"Monzo App" the mobile application through which Monzo conducts its
business;
 - 115 -

"Monzo Employee Share Plans" the CSOP, the Unapproved Plan and iNED Equity
Participation Scheme;

"Monzo Support US" Monzo Support US Inc., a Delaware corporation

incorporated on 18 September 2018;

"New Securities" any shares or other securities convertible into, or carrying

the right to subscribe for, those shares issued by Monzo
after 29 October 2018 (other than shares or securities
issued as a result of the events set out in Article 11.6 of
the Articles);

"Nomination Committee" the nomination committee of the Board which currently

comprises of Tim Brooke (Committee Chairman), Amy
Kirk, Miles Grimshaw and Keith Woollard;

"Non-Executive Directors" all directors other than the Executive Directors of Monzo,
from time to time;

"Offer" the offer for subscription of up to 2,592,520 new E

Ordinary Shares being made on the terms set out in this
Prospectus;

"Offer Period" 3 December 2018 to 12 December 2018;

"Offer Price" £7.7145 per E Ordinary Share;

"Orange Digital Ventures" Orange Digital Ventures Support SAS (formerly Orange
Digital Ventures SAS);

"Order of Priority" as defined in Part VII, paragraph 4.2(d) of this Prospectus;

"Ordinary Majority" holders of more than 50% of the Ordinary Shares held by
Ordinary Shareholders, excluding the Investors, Tom
Odell, the Kevin Systrom Revocable Trust, Excluded
Shareholders, the Crowdcube Nominee and the
Crowdcube Investors;

"Ordinary Shares" the ordinary shares in Monzo with a nominal value of

£0.0000001 each and an aggregate nominal value of
£2.438285710;

"Overseas Shareholders" shareholders with registered addresses outside the United

Kingdom or which are incorporated in, registered in or
otherwise resident or located in, countries outside the
United Kingdom;

"Parent Undertaking" has the meaning set out in section 1162 of the Act;

"Passion Capital" Passion Capital FS L.P.;

"PCA" a personal current account;

"Permitted Transfer" a transfer of shares in the capital of Monzo in accordance

with Article 14 of the Articles, as summarised in Part VII,
paragraph 4.2(l) of this Prospectus;

10
This assumes that all transfers and re-designations of Ordinary Shares in connection with the Series E Investment Round have
completed (completion is pending receipt of stamped stock transfer forms from HMRC).
 - 116 -

"Permitted Transferee" a selection of individuals and entities set out in the Articles
that a Permitted Transfer can be made to;

"Phase 1" as defined on page 27 of this Prospectus;

"Phase 1 Applicants" as defined on page 28 of this Prospectus;

"Phase 2" as defined on page 28 of this Prospectus;

"Phase 2 Applicants" as defined on page 28 of this Prospectus;

"Pounds", "GBP" or "£" or "Pounds the lawful currency of the United Kingdom;
Sterling"

"PRA" the UK Prudential Regulation Authority;

"Priority Tranche" as defined in Part VII, paragraph 4.2(d) of this Prospectus;

"Proceeds" as defined in Part VII, paragraph 4.2(d) of this Prospectus;

"Proposed Director" Alwyn Jones, details of whom are set out on Part V of this
Prospectus;

"Prospectus" or "this document" this document dated 26 November 2018, comprising a

prospectus for the purposes of the Prospectus Rules
(together with any supplements or amendments thereto);

"Prospectus Rules" the prospectus rules made under Part VI of FSMA (as set
out in the FCA Handbook), as amended;

"Qualifying IPO" an IPO approved with (i) the consent of the Investor
Majority and (ii) if the value of each E Ordinary Share
immediately prior to the IPO determined by reference to
the price per share at which Ordinary Shares are to be
offered for sale, placed or otherwise marketed pursuant to
such IPO is not equal to or greater than the original
purchase price of such E Ordinary Share (adjusted as
necessary for any bonus issue), Series E Majority
Consent;

"Relevant Investors" Passion Capital, the Foundations, Thrive, Orange Digital

Ventures, Stripe, Goodwater Capital, General Catalyst,
Accel and the Crowdcube Investors;

"Relevant Person" in respect of the Founders, Matt Heath, James Nicholson,

Simon Vans-Colina and Leah Templeman, an individual
who is employed by or who provides consultancy services
to Monzo or any member of the Group (and for the
avoidance of doubt the provision of services as a non-
executive director shall not, for the purposes of this
definition, constitute consultancy services);

"Relevant Shareholder" Matt Heath, James Nicholson, Simon Vans-Colina, and

Leah Templeman;

"Relevant Sum" as defined in Part VII, paragraph 4.2(n) of this Prospectus;

"Representative Agreement" the representative agreement that appoints Crowdcube as

the representative of a Crowdcube Investor in respect of
the E Ordinary Shares, further details of which are
 - 117 -

included in Part VII paragraph 5;

"Sale Shares" Shares which the Shareholder wishes to transfer;

"Selling Shareholder" as defined in Part VII, paragraph 4.2(o) of this Prospectus;

"Senior Managers" or "Senior the senior managers of Monzo from time to time;
Management"

"Series C Investment Round" Monzo's Series C equity fundraising round that completed
in February 2017;

"Series C Investors" the persons who invested in Monzo as part of the Series
C Investment Round;

"Series D Investment Round" Monzo's Series D equity fundraising round that completed
in November 2017;

"Series D Investors" the persons who invested in Monzo as part of the Series
D Investment Round;

"Series E Majority" the holders of more than fifty per cent (50%) of the E
Ordinary Shares held by the Investors from time to time;

"Series E Majority Consent" the prior written consent of the Series E Majority;

"Series E Investors" the persons who invested in Monzo as part of the Series
E Investment Round;

"Series E Investment Round" Monzo's Series E equity fundraising round that completed
in October 2018;

"Shareholder" a holder of Shares including, for the avoidance of doubt,

Existing Crowdcube Investors;

"Shareholders' Agreement" the amended and restated shareholders' agreement dated

29 October 2018 between the Investors (as defined
therein), the Founders, certain of Monzo's Existing
Shareholders and Monzo;

"Shares" the A1 Ordinary Shares, the A2 Ordinary Shares, the B

Ordinary Shares, the C Ordinary Shares, the D Ordinary
Shares, the E Ordinary Shares and the Ordinary Shares
in the capital of Monzo;

"Shortfall Amount" as defined in Part VII, paragraph 4.2(d) of this Prospectus;

"Starting Price" the starting price specified in the Articles for the A1
Ordinary Shares, A2 Ordinary Shares, B Ordinary Shares,
C Ordinary Shares and D Ordinary Shares and the E
Ordinary Shares;

"Stripe" Mammoth, LLC;

"subsidiary" has the meaning given in section 1159 of the Act;

"Subsidiary Undertaking" has the meaning given in section 1162 of the Act;

"Super Investor Majority" the holders of more than fifty per cent (50%) of the Shares
held by the Investors, to include at least three of General
 - 118 -

Catalyst, Accel, Passion Capital, Thrive, Stripe,

Goodwater Capital and the Foundations;

"Thrive" Thrive Capital Partners V, L.P. and Claremount V

Associates, L.P.;

"Transfer Notice" A notice in writing from the Shareholder who wishes to

transfer Shares to Monzo specifying:

(a) the number of Shares he wishes to transfer;

(b) if he wishes to transfer those Shares to a third

party, the name of the proposed third party; and

(c) subject to Article 13.8(a) of the Articles, the price

at which he wishes to transfer those shares;

"Unapproved Plan" Monzo's unapproved share option plan;

"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland;
and

"US" or "United States" the United States of America, its territories and
possessions, any state of the United States and the
District of Columbia.
 - 119 -

APPENDIX

FY2017 annual report

Monzo Bank Limited (formerly Focus FS Limited)

Report and Financial Statements

28 February 2017

Registered number: 09446231

Contents
PAGES
Chief Executive’s review 1-3
General information 4—5
Directors’ report 6—8
Statement of directors’ responsibilities 9
Independent auditors’ report 10—12
Statement of comprehensive income 13
Statement of financial position 14
Statement of changes in equity 15
Statement of cashflows 16
Notes to the financial statements 17—32
 Annual Report 2017
The last twelve months have seen hundreds of
thousands of people sign up to Monzo as we
prepare to launch our current account.

Here we present our transparent annual report for

our crowdfunding investors, our community and our
customers, with financial statements for the year
ending 28 February 2017.

Chief Executive's review

In February 2015, we set out to build a bank that we’d be proud to call our own. We were 12 people with zero
customers, temporarily camped out in the offices of our friends at White Bear Yard in London. We wanted to change the
way people thought about their money.

Two years later, we’re serving almost 250,000 customers across the UK and people write to us everyday letting us know
how we’ve helped give them back control of their finances.

Júlia Costa-Simson Follow

@jcdcaldas

The future of banking is... NOW. First day using my Monzo and
it's already changed my life @MonzoLoveTweets
2:25 PM - 2 Jun 2017

1 5

In time, we want Monzo to be a bank that improves the lives of a billion people around the world.

Last year

We have had a fantastic year - our prepaid programme has just hit 240,000 funded accounts, with more than £250m
spent in total.

Page 1 of 32
The first five months of 2017 in particular have been very strong. Since January, we’ve seen an average of 5% weekly
growth in customer numbers and 7% weekly growth in transaction volumes. This growth is almost entirely organic from
word-of-mouth referrals as people tell their friends and family.

In February and March, we agreed £22.5m of investment from Passion Capital, Thrive, Orange Digital Ventures, and
more than 6,500 Crowdcube investors. We have also now directly connected to both Faster Payments and Mastercard
as members and in April of this year we received our full UK banking licence.

The foundations are now in place for us to launch full bank accounts.

The next year

We have two key priorities for the next six months.

First, we want to continue to grow our user base and ensure we can meet that level of demand operationally.

Delightful customer support has been a key pillar of our success so far. Even though we’re running a mobile-only bank,
offering authentic human interaction is crucial to building and maintaining trust. Our customers should be able to talk
with someone at Monzo about their money, at any time of night or day.

If we continue to grow at this rate, we will hit somewhere between 500,000 and 800,000 accounts by the end of the
year. To continue to offer the level of support we aim for, we will need to significantly expand our team; we’re looking to
bring on around 40 new customer operations staff in the next six months.

Our second priority is rolling out the current account. We believe people shouldn’t need to think about financial
products. People didn’t sign up for Monzo because they were looking for a prepaid card; instead, they want immediate
visibility and control of their money. The shift from prepaid card to current account, therefore, should be as seamless as
possible for our customers. The current account will have all of the functionality of the existing prepaid card, but add on
features like Direct Debits, Faster Payments and overdrafts.

We try to avoid “big bang” launches, instead preferring to roll-out new features iteratively. This reduces risk and
ensures we can continue to offer people the level of service they’ve come to expect from Monzo. We have about fifty
current accounts live today among our staff, and we’ll soon progress to a few thousand customers. At the moment,
we’re aiming to offer the current account to all existing customers in late summer. The wait might be frustrating at
times for our community, but it’s important to get it right. We have a responsibility to keep our customers' money safe.

From a financial perspective, we’ve got enough capital for at least the first 12 months of life as a bank. To create a
viable, sustainable business, it’s important that we reach profitability over time. However, profitability is not a key
priority for this year, and we would prefer to focus on growth over driving revenue. As a consequence, and as explained
in our crowdfunding pitch earlier this year, we’ll need to raise more funding in early 2018. If we grow even faster than
expected, we may need to accelerate funding plans. We are also exploring ways to include a crowd component in the
next investment round to include as many of our community as possible.

Having built direct connections into Mastercard and Faster Payments, our unit economics will improve dramatically
once customers move to the current account. The prepaid scheme loses around £50 per active customer per year.
Simply by moving to current accounts powered by our own technology, we plan to significantly reduce this amount.

The largest remaining costs are customer support and ATM usage. On customer support, we believe that we will be able
to significantly improve efficiency in the long-term, so we’re prepared to over-invest in the short-term to provide our
customers with a world-class experience.

Page 2 of 32
Around 40% of the per-customer loss is due to international ATM usage outside the UK or EU, with a small minority of
our user-base driving the majority of this cost. As a result, we will explore ways to reduce this cost in collaboration with
our community – it will not be a profit-making exercise. UK and EU ATM usage costs us much less, and we aim to keep
this free. We still believe foreign exchange at point-of-sale (in shops, restaurants and online) can be provided to
customers for free.

On the revenue side, we will start experimenting with lending functionality. Roughly speaking, we aim to be in the
cheapest quarter of the market on price (adjusted for factors like risk, customer profile, and the type of lending), but we
do not aim to be price leaders in all circumstances. Nor do we wish to set a single headline price and compete as part
of "best-buy” tables. Instead, we will focus on offering lending tools to to help people manage their day-to-day finances
more effectively. We want to give people immediate visibility and control of their money, rather than tempting them in
with a low headline price and then recouping costs elsewhere.

As a result, we will aim to run a number of quick, small-scale lending trials to better understand how people like to
manage their money. When we’re confident these new product features work well for customers, we’ll roll them out
more widely. You may start to see glimpses of new features or pricing that we’re trialling over the next few months!

Long-term

In the long-term, we want to build a powerful financial control centre for a billion people. We don’t want to be a full-
service bank, offering Monzo mortgages or Monzo credit cards. Instead, we want to be a platform or marketplace that
gives people visibility and control of all of their money, whichever providers they use. The future of banking is data and
identity.

Imagine if you could collect loyalty points simply by using your Monzo card to pay in shops. Or if your gas and electricity
tariff was automatically switched to ensure you’re always getting the best deal. Imagine opening a new ISA with a
couple of taps, investing all the money Monzo has helped you save. We are looking at early prototypes of these third-
party integrations today and some are already pretty magical. We will aim to roll out a handful of these to our customers
in the next 12 months.

There are clearly potential risks and pitfalls here. Who gets to access customer data? What purposes can they use it
for? Is it stored securely after it’s shared? These are questions we will need to address before these third-party
services can be offered to all customers.

In principle, we believe the customer should be in control of their financial data. As such, we will explain what benefit
you’ll get from sharing, and we won’t share your personal data with third parties without your explicit consent. We also
believe in transparency – if Monzo benefits from a data-sharing deal, we’ll let you know about it upfront. If you don’t
give consent, your data will remain private. We welcome new regulation (GDPR and PSD2 in particular) in this area
because we believe it puts the customer firmly in control of their personal data.

We see ourselves as trusted custodians of both your money and your data. We will only succeed if we maintain that
trust.

We’re incredibly excited about this year and the opportunities ahead of us. I’d like to thank the Monzo team, our
investors, and the wider Monzo community who all have helped us get this far. Here’s to the next 12 months!

Tom Blomfield
CEO, Monzo
21st June 2017

Page 3 of 32
General information

Directors

Baroness D Kingsmill
T Blomfield
T Brooke
E Burbidge
G Dolman
M Grimshaw
A Kirk
K Woollard

Auditors

Ernst & Young LLP

25 Churchill Place
Canary Wharf
London
E14 5EY

Bankers

Royal Bank of Scotland Group Plc

280 Bishopsgate
London
EC2M 4RB

Solicitors

Taylor Wessing LLP

5 New Street Square
London
EC4A 3TW

Page 4 of 32
Registered Office

1st Floor
230 City Road
London
EC1V 2QY

Page 5 of 32
Directors' report

The directors present their report and financial statements for the 12 months ended 28 February 2017. These financial
statements have been prepared under International Financial Reporting Standards as adopted by the European Union,
rather than UK GAAP.

Results and dividends

The loss for the year after taxation amounted to £6,689,000 (2016 – loss of £1,446,000). The directors do not
recommend a final dividend (2016 – £nil).

Principal activities

The principal activity of Monzo Bank Limited (the “Bank” or the “Company”) is to provide retail banking services in the
UK.

During the period the Company continued the building of the capability to provide banking services to its customers
and obtaining an unrestricted license to do so. It also launched a prepaid debit card in order to be able to use the
lessons learned from this to build the best possible current account product for its customers.

Directors

The directors who have held office during the year ended 28 February 2017 are as follows:

Baroness D Kingsmill (Chairman)

T Blomfield
T Brooke
E Burbidge
G Dolman (appointed 7 November 2016)
M Grimshaw (appointed 21 February 2017)
K Woollard (appointed 23 May 2016)
A Kirk (appointed 24 January 2017)

Page 6 of 32
Directors’ liabilities

The Bank has indemnified all directors of the Bank against liability in respect of proceedings brought by third parties,
subject to the conditions set out in the Companies Act 2006. Such qualifying third party indemnity provision was in
force during the year.

Financial risk management

The Directors’ assessment and approach to financial risk management are detailed in note 4 of these accounts.

Going concern

Since incorporation the Company has undertaken a series of successful equity raisings to fund the start- up phase of
the business. The initial focus of the Company was on obtaining a banking licence, which was received in August 2016
subject to restrictions. The restrictions were lifted in April 2017 and the Company can now launch its product in the
market.

To support this launch and subsequent-phases of its growth, the Company has raised sufficient equity to ensure that it
can survive for a period in excess of 12 months from the end of the reporting period. Details of equity raised are
contained in Note 14. Consequently the financial statements have been prepared on a going concern basis.

Events since the balance sheet date

In March 2017 £2.5m was raised via the issue of 2.5m ordinary shares to investors.

The restriction to maximum total deposits of £50,000 was lifted by the FCA and a full banking licence was granted in
April 2017.

Appointment of auditors

Ernst & Young LLP were appointed as auditors of the Company on 28 February 2017 and have been re-appointed
pursuant to section 487(2) of the Companies Act 2006 unless the members or directors resolve otherwise.

Employment of disabled persons

The company does not discriminate against any person on the grounds of disability.

Disclosure of information to the auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit
information, being information needed by the auditor in connection with preparing its report, of which the auditor is
unaware. Having made enquiries of fellow directors and the Company’s auditor, each director has taken all the steps
that he is obliged to take as a director in order to make himself aware of any relevant audit information and to establish
that the auditor is aware of that information.

Page 7 of 32
Auditors

In accordance with section 485 of the Companies Act 2006, a resolution is to be proposed at the Annual General
Meeting for reappointment of Ernst & Young LLP as auditors.

On behalf of the Board

Tom Blomfield
Director
21 June 2017

Page 8 of 32
Statement of directors' responsibilities

The directors are responsible for preparing the Directors Report and the financial statements in accordance with
applicable United Kingdom law and those International Financial Reporting Standards as adopted by the European
Union.

Under Company Law the directors must not approve the financial statements unless they are satisfied that they present
fairly the financial position, financial performance and cash flows of the company for that period. In preparing those
financial statements the directors are required to:

select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting
Estimates and Errors and then apply them consistently;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions, other events and conditions on the company's financial
position and financial performance;
state that the company has complied with IFRSs, subject to any material departures disclosed and explained in
the financial statements; and
make judgements and estimates that are reasonable and prudent.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
company's transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.

Page 9 of 32
Independent auditors' report

to the members of Monzo Bank Limited (formerly Focus FS Limited)

We have audited the financial statements of Monzo Bank Limited (formerly Focus FS Limited) for the 12 months ended
28 February 2017 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flows and the related notes 1 to 19. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement set out on page 9, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.

Page 10 of 32
Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances
and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates
made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and
non-financial information in the Directors’ Report to identify material inconsistencies with the audited financial
statements. If we become aware of any apparent material misstatements or inconsistencies we consider the
implications for our report.

Opinion on the financial statements

In our opinion the financial statements:

give a true and fair view of the state of the company’s affairs as at 12 months ended 28 February 2017 and of its
loss for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the Board of Directors’ Report have been prepared in accordance with applicable legal requirements.

Page 11 of 32
Matters on which we are required to report by exception

In light of the knowledge and understanding of the Bank and its environment obtained in the course of the audit, we
have identified no material misstatements in the Board of Directors’ Report. We have nothing to report in respect of the
following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.

Javier Faiz (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor
London
21 June 2017

The following foot note should be added to the audit report when it is published or distributed electronically:
Notes:

1. The maintenance and integrity of the Monzo Bank Limited (formerly Focus FS Limited) web site is the
responsibility of the directors; the work carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.

Page 12 of 32
Statement of comprehensive income

For the 12 months ended 28 February 2017

  Notes 12 months ended 13 months ended 

    28 February 2017 29 February 2016

    £000 £000

Other operating income     120 5 

Administrative expenses 5 (8,047) (1,691)

Loss before tax   (7,927) (1,686)

Taxation 8 1,238 240

Total comprehensive loss   (6,689) (1,446)

The notes on pages 17 to 32 are an integral part of these financial statements. Other income and operating losses were
derived from continuing operations in both the current and prior year.

Page 13 of 32
Statement of financial position

at 28 February 2017

  Notes 28 February 2017 29 February 2016

    £000 £000

Assets      

Cash and cash equivalents 9 14,874 411

Trade and other receivables 10 4,402 320

Property plant and equipment 11 178 13

Intangible assets 12 24 -

Total assets   19,478 744

Liabilities      

Trade and other payables 13 1,080 176

Total liabilities   1,080 176

Equity      

Called up share capital 14 0 0

Share premium account   26,298 2,000

Other reserves   235 14

Accumulated losses   (8,135) (1,446)

Total equity   18,398 568

Total liabilities and equity   19,478 744

The notes on pages 17 to 32 are an integral part of these financial statements. The financial statements on pages 13 to
32 were approved and authorised for issuance by the Board on 21st June 2017 and signed on its behalf by

Tom Blomfield
Director

Page 14 of 32
Statement of changes in equity

for the 12 months ended 28 February 2017

Share Share Other Retained Total

 
capital premium reserves losses equity

  £000 £000 £000 £000 £000

At 18 February 2015 - - - - -

Shares issued - 2,000 - - 2,000

Share-based payments
- - 14 - 14
reserve

Losses for the period - - - (1,446) (1,446)

At 1 March 2016 - 2,000 14 (1,446) 568

Shares issued - 24,288 - - 24,288

Cost of issuance - (63) - - (63)

Share-based payments
- - 294 - 294
reserve

Exercise of options - 73 (73) - -

Losses for the year - - - (6,689) (6,689)

At 28 February 2017 - 26,298 235 (8,135) 18,398

Page 15 of 32
Statement of cashflows

For the 12 months ended 28 February 2017

12 months ended 28 12 months ended 29

  Notes
February 2017 February 2016

    £000 £000

Cash flows from operating activities      

Loss   (6,689) (1,446)

Adjustments for:      

Depreciation of property plant and

  36 6
equipment

Amortisation of intangible assets   5 -

Share-based payments   294 14

(Increase) in trade and other receivables 10 (4,082) (320)

Increase in trade and other payables 13 904 176

Net cash used in operating activities   (9,532) (1,570)

Cash flows from investing activities      

Acquisition of property, plant and

11 (201) (19)
equipment

Acquisition of intangible assets 12 (29) -

Net cash from investing activities   (230) (19)

Cash flows from financing activities      

Net proceeds from issuance of ordinary

  24,225 2,000
shares

Net cash from financing activities   24,225 2,000

Net increase in cash and cash equivalents   14,463 411

Cash and cash equivalents at beginning of

  411 -
the period

Cash and cash equivalents at end of

9 14,874 411
year/period

Page 16 of 32
Notes to the financial statements

at 28 February 2017

1. Basis of preparation

The accounts have been prepared on an historical cost basis and in accordance with International Financial Reporting
Standards (‘IFRSs’) as adopted by the European Union. The company prepared its financial statements under Financial
Reporting Standards for Smaller Entities (‘FRSSE’) for the period from 18 February 2015 to 29 February 2016. FRSSE
differs in certain respects from IFRSs, hence certain disclosures have been amended to comply with IFRSs. There have
been no material changes to the financial statement results or balance sheet position in either the current or previous
period as a result of the change in accounting policy. The significant accounting policies adopted are set out in Note 3.

The financial statements are presented in GBP, which is also the Company’s functional currency.

Certain new accounting standards and interpretations have been published that are not mandatory for the 12 months
ended 28 February 2017 and have not been early adopted by the company. In addition there are certain new standards
that are not yet effective and may impact the Company in future periods. These include IFRS 9, ‘Financial Instruments’,
IFRS 15, ‘Revenue from contracts with customers’ and IFRS 16, ‘Leases’. These standards are expected to impact the
Company, in particular IFRS 9 once banking operations have commenced, though a detailed analysis of the impact on
the company has not yet been performed.

The financial statements of the Company have been prepared in accordance with IFRS as issued by the IASB.

2. Critical accounting estimates and judgments

The preparation of the financial statements requires the use of accounting estimates and assumptions. Estimates and
judgements are continually evaluated based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from
these estimates and assumptions.

Management considers that the accounting estimates relating to fair valuing stock based compensation (Note 15), and
the recognition (or not) of deferred tax assets for carried forward tax losses (Note 3(g)) are the most material to the
financial statements.

Going concern

Since incorporation the company has undertaken a series of successful equity raisings to fund the start- up phase of
the business. The initial focus of the company was on obtaining a banking licence. A licence with restrictions was
obtained in August 2016 and the restrictions were lifted in April 2017. The focus of the company has been on further
developing its customer proposition and building its operating model and infrastructure. The Company plans to launch
its banking operations to customers in 2017. To support this launch, and subsequent-phases of its growth, the company
has raised sufficient equity to ensure that it can survive for a period in excess of 12 months from the reporting date.
However in order to support growth of the business it is expected that a further equity raise will be undertaken at the
start of 2018. Given the success of previous equity raisings and the growth that is being experienced by Monzo we
believe that there will be strong demand for that issue. Consequently the financial statements have been prepared on a
going concern basis.

Page 17 of 32
Valuation of share options

The Company measures the cost of equity-settled options based on the fair value of the awards granted. The fair value
is determined based on the observable share prices or by using an appropriate valuation model. The use of option
pricing models to determine the fair value requires the input of highly subjective assumptions including the expected
price volatility, expected life of the award and dividend yield. Changes in the subjective assumptions can materially
affect the fair value estimates. The assumptions and models used for estimating the fair value of share-based
payments is disclosed in note 15.

Summary of significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements
to the extent they have not already been disclosed in the other notes above.

a. Receivables

Receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.

b. Cash and cash equivalents

For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes deposits
held at call with financial institutions.

c. Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment.
Historical cost includes expenditure that is directly attributable to the cost of the assets.

Depreciation is provided on all property, plant and equipment, and calculated using the straight-line method to
allocate their cost, net of residual values, over their estimated useful lives, as follows:

Office and IT Equipment – 3 years

Fixtures and fittings – 4 years

Office fit out costs and legal costs of acquiring a new office lease are recognised on a straight-line basis over the
life of the lease.

d. Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is calculated using the straight-line method, to allocate the depreciable amount of the assets to
their residual values over their estimated useful lives as follows once brought into use:

Third party software licences – amortised over the length of licence, which varies between 1 and 10 years.

Amortisation is recorded within administrative expenses in the Statement of Comprehensive Income.

e. Trade and other payables

These amounts represent liabilities for goods and services provided to the company prior to the end of the

Page 18 of 32
 financial period which are unpaid. The amounts are unsecured and usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities. They are recognised initially at fair value and
subsequently measured at amortised costs using the effective interest method.

f. Current Taxation

Current income tax assets and liabilities for the current period are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are
those that are enacted or substantively enacted, at the reporting date, when the Company generates taxable
income. Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

g. Deferred tax

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the reporting date and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probably that future taxable profits will be
available against which the temporary differences can be utilised.

h. Share-based payments

Employees (including senior executives) may be entitled to receive remuneration in the form of share options to
reward strong long-term business performance and to incentivise growth for the future.

The cost of the employee services received in respect of the share options granted is recognised over the period
that employees provide services. This is generally the period in which the award is granted or notified and the
vesting date. The overall cost of the award is calculated using the number of shares and options expected to vest
and the fair value of the options at the date of grant.

The fair value of options at grant date is recognised as an employee expense with a corresponding increase in
equity over the period that the employees become unconditionally entitled to the awards. The grant date fair
value is determined using valuation models which take into account the terms and conditions attached to the
awards. Inputs into the valuation model include the risk free rate and the expected volatility of the Company’s
share price.

i. Revenue Recognition

At present the Company generates income from interchange and interest receivable. This is recognised to the
extent that it is probable that the economic benefits will flow to the Company and they can be reliably measured,
which is consistent with the approach to be taken with revenue in future periods.

j. Foreign exchange

The Bank’s financial statements are presented in GBP, which is the Bank's functional currency. That is the
currency of the primary economic environment in which the Bank operates. Transactions in foreign currencies
are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and

Page 19 of 32
 liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange
ruling at the reporting date. All differences are taken to the Statement of Comprehensive Income. Non-monetary
items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value is determined.

4. Risk Management

At Monzo, we take the responsibility of being a bank very seriously and recognise that the firm is exposed to a number
of risks through our chosen business model and business strategy. Identifying, assessing, managing and reporting on
those risks is central to the way we run the Bank. Good risk management enables the creativity we seek to provide for
the development of our bank and its technology.

Risk Management Framework

Our approach to Risk Management supports the wider business strategy and is delivered through our Risk Management
Framework which comprises 6 key components: Risk Appetite, Policies, a 3 Lines of Defence organisation structure,
various risk procedures, tools and techniques, risk reporting and an appropriate governance structure.

Principal Risks

Through our business strategy and business model we are exposed to a number of risks, the most material of which we
have termed our principal risks and they are:

Strategic and Business Model Risk – risk or threats that materially affect the business strategy, business model
and consequently the successful execution of the business plan.
Customer Outcome Risk – risk that our culture, behaviours and/or actions result in poor customer outcome
and/or detriment to customers through our product and services not meeting needs.
Retail Credit Risk – risk that customers who borrow do not meet their obligations in accordance with the agreed
terms.
Operational Risk – risk of direct or indirect loss resulting from failed internal processes, people and systems and /
or from external events.
Financial Risk – various risks which impact the financial profile of the business including liquidity risk, interest
rate risk and wholesale credit risk.
Compliance Risk – risk of failure to meet with the relevant legislation and / or regulation.

Page 20 of 32
Risk Profile

During the year 2016/17 the business has been focused on a prepaid card programme with a number of partners to test
a number of areas of the business model whilst building the infrastructure to launch a current account programme. The
most significant risks are therefore the viability of the business model and the operational risks of running the prepaid
programme.

Financial crime, cyber security and operational process risk are the main exposures. There is very limited credit and
financial risk in the prepaid card programme.

As full banking operations commence the Company will be exposed to more significant risks and to the full range of
risks described above.

Governance

Our governance structure has been developed to support our launch as a bank. It comprises a Board of Directors
supported by 4 Board Committees each of which has membership drawn from the independent non-executives on the
Board. The 4 committees are:

Risk & Compliance Committee

Audit Committee
Remuneration Committee
Nomination Committee

Day to day running of the business is delegated to the CEO who has established 2 Management Committees to support
him; an Executive Committee for general business matters and an Assets and Liability Committee on Balance Sheet
matters.

Page 21 of 32
5. Loss before tax

  12 months ended 13 months ended 

  28 February 2017 29 February 2016

  £000 £000

This is stated after charging:    

Depreciation and amortisation of owned assets 41 6

Share-based payments 294 14

Auditors’ remuneration for audit of the Company’s financial statements 30 -

Prepaid card scheme development 2,713 111

Premises cost 233 145

Marketing 376 49

6. Directors’ remunerations

  12 months ended 13 months ended 

  28 February 2017 29 February 2016

  £000 £000

Total Directors’ remunerations    

Wages and salaries 65 69

Share-based payments 73 -

  138 69

Highest paid Director    

Wages and salaries 60 69

Share-based payments - -

  60 69

Page 22 of 32
7. Personnel Expenses

Employee benefit expense (including Directors) comprise:

  12 months ended 13 months ended 

  28 February 2017 29 February 2016

  £000 £000

Salaries 1,995 697

Social security contributions 239 91

Share-based payments 294 14

  2,528 802

The average number of employees of the company during the period was 47 (13 months ended 29 February 2016 – 14)
all of whom were employed in management, operations and administration.

Page 23 of 32
8. Taxation

  12 months ended 13 months ended 

  28 February 2017 29 February 2016

  £000 £000

UK corporation tax credit on loss for the period 1,238 240

Factors affecting future tax charges

From April 2017 the UK corporation tax rate will fall from 20% to 19%. This has no immediate impact in the current or
next financial period for the company, however it should result in lower tax charges as and when the company becomes
profitable and all the carried forward trading losses are utilised.

  12 months ended 13 months ended 

  28 February 2017 29 February 2016

  £000 £000

Loss on ordinary activities before tax (7,927) (1,686)

Standard rate of corporation tax 20% 20%

Expected tax credit 1,585 337

Effects of:    

Expenses not deductible for tax (27) (7)

Additional deduction for R&D expenditure 966 187

Impact of surrendering losses at lower rate (470) (92)

Loss in year where no deferred tax asset recognised (816) (185)

Total tax credit for the period 1,238 240

Page 24 of 32
Deferred tax

The deferred tax included in the balance sheet is as follows:

  12 months ended 13 months ended 

  28 February 2017 29 February 2016

  £000 £000

Included in debtors - -

  - -

  12 months ended 13 months ended 

  28 February 2017 29 February 2016

  £000 £000

Accelerated capital allowances (25) (2)

Losses 25 2

  - -

The UK Government has announced reductions in UK corporation tax to 17% by 1 April 2020. The closing deferred tax
assets and liabilities have been calculated taking into account that existing temporary differences may unwind in
periods subject to the reduced rates. A deferred tax asset has not been recognised in respect of tax losses carried
forward totalling £4,993,718 as there is insufficient evidence as to their recoverability.

9. Cash and cash equivalents

Cash and cash equivalents consists of balances held on overnight deposit with the Bank of England and RBS and
amount to £14,874,000 at 28 February 2017 (29 February 2016 – £411,000).

10. Trade and other receivables

  28 February 2017 29 February 2016

  £000 £000

Prepayments 348 20

Collateral provided to payment scheme providers 2,461 -

R&D tax reclaim 1,238 240

Deposit on premises 171 -

Other receivables 184 60

  4,402 320

Page 25 of 32
11. Property, plant and equipment

  Fixtures and fittings  Office and IT equipment  Total 

  £000 £000 £000

Cost    

At 18 February 2015 – - -

Additions – 19 19

Disposals – - –

At 1 March 2016 – 19 19

Additions 1 200 201

Disposals – – –

At 28 February 2017 1 219 220

Depreciation    

At 18 February 2015 – - -

Charge for this period – 6 6

Depreciation on disposal – - –

At 1 March 2016 – 6 6

Charge for this period – 36 36

Depreciation on disposal – – –

At 28 February 2017 – 42 42

Net book value    

At 28 February 2017 1 177 178

At 29 February 2016 – 13 13

Page 26 of 32
12. Intangible assets

  Software licenses

  £000

Cost  

At 18 February 2015 –

Additions –

At 29 February 2016 –

Additions 29

At 28 February 2017 29

Depreciation  

At 18 February 2015 –

Charge for this period –

Depreciation on disposal –

At 29 February 2016 –

Charge for this period 5

Depreciation on disposal –

At 28 February 2017 5

Net book value  

At 28 February 2017 24

At 29 February 2016 –

Page 27 of 32
13. Trade and other payables

  28 February 2017 29 February 2016

  £000 £000

Trade creditors 229 54

Other taxes and social security costs 103 29

Accruals 748 93

  1,080 176

Page 28 of 32
14. Called up share capital

  28 February 2017 29 February 2016

  £ £

Ordinary shares of £0.0000001/£0.00001 each 7 4

Deferred shares of £0.00001 each – 1

  7 5

Number of ord. Number of deferred Share

  Nominal  
shares shares capital

As at 18 February 2015   – – –

Shares issued 0.001   1,000 – 1

Shares split   99,000 –

  0.00001   100,000 – 1

Shares issued 0.00001   350,746 – 4

Conversion to deferred
  (50,231) 50,231 -
shares

As at 1 March 2016 0.00001   400,515 50,231 5

Shares split 0.0000001   39,650,985 4,972,869 -

      40,051,500 5,023,100 5

Shares issued 0.0000001 Apr-16 11,676,610 – 1

Conversion to deferred
(13,125) 13,125
shares

Cancellation of deferred
– (5,036,225) (1)
shares

Options exercised 0.0000001 Oct-16 355,459 – –

Shares issued 0.0000001 Oct-16 6,203,955 – 1

Shares issued 0.0000001 Feb-17 13,422,151 – 1

As at 28 February 2017 71,696,550 – 7

Some of the shares in issue are owned by management and staff and are subject to time based vesting conditions. At
the balance sheet date 10,636,554 shares were unvested. In the event of shares failing to vest the Company has the
right to repurchase the shares at their nominal value.

Page 29 of 32
At the balance sheet date 159,629 ordinary shares were subject to a monthly vesting programme and in accordance
with IFRS 2 will be treated as Treasury shares whilst they remain unvested.

15. Share-based payments

The company operates two share options scheme for the benefit of certain members of staff. The first is an HMRC
approved Company Share Option scheme (‘CSOP’) in which awards can be made to employees subject to conditions.
The strike price for these options is set according to the fair market share price at the time of issue as agreed with
HMRC. For the Non-CSOP scheme, awards are made with the strike price set equal to the nominal value of the shares.
For both schemes typically twenty five per cent of the options vest at the end of the first year of employment. The
remainder vest evenly over the next three years. The fair value per share was based on the pricing achieved in the
funding round immediately preceding the issuance given the shares are not actively traded. The total expense in 2017
was £294k (2016 £14k).

The main assumptions that have been used in deriving the value of the options at grant are;

Risk free rate 0.32%

Volatility 40%

Dividend yield nil

Expected lift 4 years

Page 30 of 32
Share-based payments (continued)

    CSOP   Non-CSOP

Fair value share price at date Fair value share price at

  Number Number
of issue date of issue

    £   £

Outstanding 18
– –
February 2015

Granted during the

12,615 19.967 28,990 19.967
period

At 29 February 2016 12,615 28,990

Share split 1,261,500 0.19967 2,899,000 0.19967

Granted during the

period

45,100 0.19967 113,933 0.19967

976,714 0.5133 322,938 0.5133

646,766 0.7737 277,827 0.7737

29,827 1.0058 – 1.0058

Lapsed (131,211) (43,820)

Exercised – (355,459)

At 28 February 2017 2,828,696 3,214,419

16. Related party transactions

Key management personnel compensation

  28 February 2017 29 February 2016

  £000 £000

Salaries & renumeration 327 206

Social security contributions 40 25

Share-based payments 118 4

  485 235

Page 31 of 32
At the balance sheet date there was a loan to an employee of £22,500. With the exception of this there were no
balances due to or from a related party.

In the opinion of the Directors there is no overall controlling party.

17. Operating leases

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

  28 February 2017 29 February 2016

  £000 £000

Within one year 127 13

Later than one year but not later than five years 1,175 –

Later than five years – –

Total 1,302 13

18. Country reporting disclosure

In 2015, the UK Government enacted legislation (contained in the Financial Services and Markets Act 2000 Statutory
Instrument 3118) with respect to country reporting disclosure. As the Company only operates in the UK this requirement
has been considered and no further disclosure is required.

19. Events after reporting date

The Company raised £2.5m of equity share capital from existing and new investors during the period from 1 March 2017
to the date of signing the accounts.

The restriction to maximum total deposits of £50,000 was lifted by the FCA and a full banking licence was granted in
April 2017.

Page 32 of 32
 - 154 -

FY2018 annual report

Monzo Bank Limited

Annual Report and Financial Statements

28 February 2018

1
What’s in this report?
General Information  3

Key stats  4

Chief Executive’s review  5

Strategic report  8

Directors’ report  10

Statement of directors’ responsibilities  12

Independent auditors’ report  13

Statement of comprehensive income  23

Statement of financial position  24

Statement of changes in equity  25

Statement of cash flows  26

Notes to the financial statements  27

2
General Information
Directors
T Blomfield
T Brooke (acting Chairman)
E Burbidge
Baroness D Kingsmill (resigned 6 April 2018)
G Dolman
M Grimshaw
K Woollard
A Kirk

Registered Office
1st Floor
230 City Road
London EC1V 2QY

Registration number
09446231

Auditors
Ernst & Young LLP
25 Churchill Place
Canary Wharf
London E14 5EY

Bankers
NatWest Markets Plc
280 Bishopsgate
London EC2M 4RB

Solicitors
Taylor Wessing LLP
5 New Street Square
London EC4A 3TW

3
4
 Annual Report 2018
A lot’s changed in the last 12 months at Monzo. Today, more than
750,000 people are using our current accounts, and more than £2
billion’s been spent through Monzo so far.

Here we present our transparent annual report for our crowdfunding

investors, our community and our customers, with our financial
statements for the year ending 28 February 2018.

Chief Executive’s review

In February this year we celebrated Monzo’s third birthday! It feels like a lot has changed in those three
years.

Back in 2015 we were a scrappy startup, offering prepaid cards to a few thousand people. Today, we’re a
fully-licensed, regulated bank with more than 750,000 people using current accounts. Our users have spent
more than £2 billion through Monzo so far. And our founding team of a dozen people has grown into a
company of more than 300.

Since the start, our commitment to transparency has been our guiding principle and underpins everything we
do at Monzo today. It means our teams can work effectively and independently, with access to all the
information they need to make good decisions. And, crucially, it helps us earn our customers’ trust. As we
grow, I want to make sure we always keep that commitment, even when it isn’t easy.

Last year
We focussed on growth for the first six months of the last financial year. From just 50,000 users in September
2016, in one year we grew to almost half a million prepaid customers.

By September 2017, we were ready to offer current accounts, so we paused new signups for three months as
we asked existing users to upgrade.

This process was tricky and technically complex. But we worked hard to make sure upgrading was as easy
and convenient as possible for our customers. When we closed the prepaid programme on 4th April 2017,
94% of active users had upgraded to current accounts.That’s remarkable in an industry where inertia can be
hard to overcome.

Moving to current accounts has given our customers access to all the power and protection that comes with
a full banking licence. But it’s also helped us begin to address our next challenge: profitability.

In September 2017, each active prepaid account cost us £65 a year to run: we paid third parties to process
payments and let users add money to their accounts by topping up from another debit card. We were also
absorbing ATM costs for cash withdrawals customers made abroad and investing heavily in customer
service.

5
The bank now runs entirely on technology we’ve built from scratch ourselves. As well as letting us respond
quickly to changing customer demands, it also costs us less. By February 2018, we were able to run a full
account for only £30.

Since then, we’ve further reduced costs by encouraging people to make bank transfers or pay salaries
directly into their Monzo account, rather than topping up with a debit card. We’ve also been able to make
savings by helping our customer support team become more efficient. Together, this has helped us lower the
cost per account to around £15 in June.

About £10 of this cost goes towards providing fast, friendly support: the team who speak to our customers
and solve their problems every day, in-app, over the phone and on social media. We see that £10 as an
investment that lets us provide an effective, delightful service that’s reflected in a Net Promoter Score of
almost +80.

All in all, that means we’ve reduced the cost to run each active account by almost 80% in just ten months.

The year ahead

In the next few months we’ll keep improving our unit economics: the money we lose or make on each current
account. Our goal is to break even on each new customer very soon, then reach overall profitability as a
business in the future. To work towards profitability, we’ll do two things.

First, we’ll work to lower the cost of providing customer support, while making sure the service stays world-
class. We’ll do that by helping our staff work more effectively with better tools and automation. And we’ll
reduce the number of questions coming in with a smarter help screen that lets customers find their own
answers faster.

We’ll also work to generate revenue through lending. We started making overdrafts available in January, and
around 37,000 people have now enabled them. Over the next few months, we’ll build new features that let
people borrow in ways that are convenient, transparent and affordable.

All of our customers should be able to rely on Monzo as their main account. So at the same time we’ll keep
working to make sure Monzo is reliable and equipped with everything they need to manage their money. At
the end of May we published a list of all the basic but essential features that Monzo was still missing. We’ve
been working through that list at pace, keeping track of our progress by ticking things off and sharing live
updates with our community @MakingMonzo.

We’ll also start to work on growth again. More than 60,000 new people open Monzo accounts each month
now, and in the next few months there’ll be one million people using Monzo. We plan to increase growth by
adding product features with real network effects, that help people use Monzo together.

The way we use money is inherently social: we use it to do things with our family, friends, partners and
colleagues on an almost-daily basis. But it isn’t always easy to use money together. It often means back-and-
forths on WhatsApp, copy-pasting account numbers, and confusion about who’s paid and who hasn’t.
Traditional banking isn’t built for the way we use our money today as part of our everyday lives.

Right now, the average user has 15 friends on Monzo, and 80% of our growth comes from word of mouth
referrals. To maximise that viral growth we’ll add product features that work better the more people you know
on Monzo.

By the end of 2019, our goal is that several million people in the UK will be using Monzo.

Our mission
We’ve always said that our vision is to build Monzo into a marketplace. A “financial hub” or “control centre”
that gives people visibility and control of all of their money.

But a "control centre” feels a bit like the cockpit of a jumbo jet – a bewildering array of buttons and dials. It
doesn’t communicate the simplicity and peace-of-mind that we strive to give our customers.

6
So we wanted to find a better way to articulate our mission to the world. Here’s what we came up with:

“Monzo makes money work for everyone”

I like this as a mission statement because it’s bold, positive and ambitious.

“It just works” - We believe that money doesn’t need to be complicated or stressful. A nod to Apple’s famous
slogan, we use design thinking to deliver simple, intuitive interfaces.

Putting your money to work - We also want to make sure our customers get the most out of their money,
whether that’s earning cash back or rewards, making smart investment decisions, or finding affordable ways
to borrow.

Monzo is for everyone - Our aims are ambitious: our goal is to bring Monzo to one billion people and beyond.
But it’s not just about how many people use Monzo, it’s also about who.

One and a half million adults in the UK don’t have a bank account and almost a quarter of the world’s
population are unbanked. Without access to basic financial services like bank accounts, you pay more and
save less. You can’t use vital services, or do basic things like pay rent or buy a phone. In the next few years,
we’ll do more to help the financially excluded access bank accounts through Monzo.

We’ll also keep supporting vulnerable customers and continue developing an empathetic approach to debt
management. And through clear communications and educational content, we’ll do what we can to improve
financial literacy and help everyone better understand their money.

Tom Blomfield
CEO

27 June 2018

7
Strategic report
The directors present their strategic report for the year ended 28 February 2018 for Monzo Bank Limited (the
“Bank”, “Monzo” or the “Company”).

Business review and key financial and other performance indicators

We’ve included a review of the business and other performance indicators as part of the Chief Executive’s
review.

The loss for the year before tax was £33.1m (2017 £7.9m) primarily as a result of an increase in our operating
costs.

Our costs increased by £26.9m to £34.9m in the current year (2017 £8m) as a result of investment in the
banking operations with the Company becoming a fully operational bank during the year.

The total equity increased to £56.2m (2017 £18.4m) as a result of two fundraising rounds undertaken in the
year and the Bank continued to be in a capital surplus position during the year.

We’ve developed our governance structure to support our launch as a bank

It comprises a Board of Directors supported by 4 Board committees, each of which has membership drawn
from the independent non-executives on the Board. The 4 committees are:

Risk & Compliance Committee

Audit Committee

Remuneration Committee

Nomination Committee

Day to day running of the business is delegated to the CEO who has established 2 management committees
to support him: an Executive Committee for general business matters, and an Assets and Liability Committee
on balance sheet matters.

Strong risk management is at the heart of everything we do

At Monzo, we’re exposed to a number of risks through our business model and business strategy. Identifying,
assessing, managing and reporting on those risks is central to the way we run the Bank. Good risk
management lets us achieve our strategic objectives without putting us or our customers at risk of harm,
while being compliant with all relevant rules and regulations.

Staff describe our culture as one of transparency, honesty, respect and putting the customer’s needs first.
This culture stems from the “tone at the top” set by the executive team and filters through the organisation.
Our incentives (including share options) are structured to support the long-term health of the organisation
rather than any short-term gains.

Risk Management Framework

Our approach to risk management supports the wider business strategy. Our Risk Management Framework
comprises 6 key components: risk appetite, policies, a 3 line of defence organisation structure, risk
procedures, tools and techniques, risk reporting, and an appropriate governance structure.

8
Principal Risks

Our principal risks are:

Strategic and Business Model Risk – risk or threats that materially affect the business strategy, business
model and consequently whether our business plan succeeds.

Customer Outcome Risk – risk that our culture, behaviours and/or actions result in poor customer outcome
and/or detriment to customers through our product and services not meeting their needs.

Retail Credit Risk – risk that customers who borrow don’t meet their obligations with us.

Operational Risk – risk of direct or indirect loss from failed internal processes, people and systems and/or
from external events.

Financial Risk – risks which impact the financial profile of the business including market risk on financial
instruments, capital adequacy risk and liquidity risk.

Compliance Risk – risk of failing to meet with the relevant legislation and/or regulations.

Risk Profile

Our key risks currently include different types of operational risk like financial crime, IT resilience, cyber
security (including data security). But this is always evolving as we develop our current account and acquire
credit risk from lending in the form of overdrafts.

On behalf of the Board

Tom Blomfield
Director

27 June 2018

9
Directors’ report
The directors present their report and financial statements for the year ended 28 February 2018 for the Bank.
These financial statements have been prepared under International Financial Reporting Standards as
adopted by the European Union. The registration number of Monzo is 09446231.

Information regarding a review of the business, and likely future developments are disclosed in the Chief
Executive's review and information regarding risk management is disclosed in the Strategic report.

Results and dividends

The loss for the year after taxation amounted to £30.5m (2017 loss of £6.7m). The directors do not
recommend a final dividend (2017 – £nil).

Principal activities of the business

The principal activity of Monzo is to provide retail banking services in the UK.

During the period Monzo continued building the ability to provide banking services to its customers and had
the restrictions on its banking licence lifted in April 2017. The Company launched a current account for its
customer base and an overdraft facility for a subset of its customers.

Directors

The directors who served the Company during the year and up to the date of the approval of the financial
statements were as follows:

T Blomfield
T Brooke (acting Chairman)
E Burbidge
Baroness D Kingsmill (resigned 6 April 2018)
G Dolman
M Grimshaw
K Woollard
A Kirk

Directors’ liabilities

The Bank has indemnified all directors of the Bank against liability in respect of proceedings brought by third
parties, subject to the conditions set out in section 234 of the Companies Act 2006. Such qualifying third
party indemnity provision was in force during the year.

Going concern

The going concern basis is dependant on maintaining enough capital and funding the balance sheet. The
directors have considered a number of factors including the projections for the Company and its capital and
funding position. Having considered this and other appropriate enquiries the Directors consider that the
Company has raised enough equity to make sure that it can operate for at least 12 months from the date of
approval of the financial statements. Details of equity raised are contained in Note 20. Consequently the
financial statements have been prepared on a going concern basis.

10
Financial instruments

The Bank finances its activities through the issue of ordinary shares as disclosed in Note 20 and through
cash deposits held as disclosed in Note 13. The Bank also holds customer deposits classified as a financial
liability, and issues overdrafts to customers which are classified as a financial asset. Other financial assets
and liabilities like trade creditors arise from the Bank’s operating activities.

The Bank doesn’t use any other financial instruments.

Research and development activities

Monzo invests in the development of its own platforms and products, so has applied to claim Research &
Development (R&D) relief from HMRC, see Note 15.

Donations

The Bank hasn’t made any charitable donations exceeding £2k and hasn’t made any donations or incurred
any expense to any registered UK political party or other EU political organisation.

Events since the balance sheet date

The key events that have occurred since the balance sheet date are listed below:

The prepaid card product was discontinued effective 4 April 2018.

The Bank signed a 2-year lease for new office space on 6 March 2018 with an anticipated move in date of
August 2018 at which point the existing office space lease will be surrendered.

There have been no other material post balance sheet events.

Disclosure of information to the auditors

So far as each person who was a director at the date of approving this report is aware, there’s no relevant
audit information, being information needed by the auditor in connection with preparing its report, of which
the auditor is unaware. Having made enquiries of fellow directors and the Company’s auditor, each director
has taken all the steps that they’re obliged to take as a director to make themselves aware of any relevant
audit information, and to establish that the auditor is aware of that information.

Auditors

Ernst & Young LLP have been re-appointed pursuant to section 487(2) of the Companies Act 2006 unless the
members or directors resolve otherwise.

On behalf of the Board

Tom Blomfield
Director

27 June 2018

11
Statement of director’s responsibilities
The directors are responsible for preparing the strategic report, director’s report and the financial statements
in accordance with applicable United Kingdom law and those International Financial Reporting Standards as
adopted by the European Union.

Under Company Law the directors must not approve the financial statements unless they are satisfied that
they present fairly the financial position, financial performance and cash flows of the Company for that
period. In preparing those financial statements the directors are required to:

select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting
Estimates and Errors and then apply them consistently;

present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;

provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the
Company's financial position and financial performance;

state that the Company has complied with IFRSs, subject to any material departures disclosed and
explained in the financial statements; and

make judgements and estimates that are reasonable and prudent.

The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company's transactions and disclose with reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.

12
Independent auditors’ report to the members of Monzo Bank
Limited
Opinion

We have audited the financial statements of the Company for the year ended 28 February 2018 which
comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of
Changes in Equity, the Statement of Cash Flows and the related notes 1 to 28, including a summary of
significant accounting policies. The financial reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion, the financial statements:

give a true and fair view of the Company’s affairs as at 28 February 2018 and of its loss for the year then
ended;

have been properly prepared in accordance with IFRSs as adopted by the European Union; and

have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report below. We are independent of
the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:

the directors’ use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or

the directors have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the Company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are
authorised for issue.

13
Overview of our audit approach

Key audit matters Overdraft recoverability

Improper revenue recognition

Risk of management override

Incomplete / inaccurate transfer of assets from a third party to the Company

Materiality Overall materiality of £600k which represents 1% of equity

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current year and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these
matters.

Risk Overdraft recoverability (2018 £12k, 2017 £0)

Overdrafts are a new product for the Company. There is currently limited historic
information showing the repayment profile of the customer base and this therefore
impacts the valuation of the asset. An impairment may be required over the asset if it
is not deemed fully recoverable.

Given the nature of the product and the client base of the Company, we have
considered there to be a risk of recoverability over the overdrawn balances – which
translates into a risk of overstatement of the net overdraft asset.

This is a new risk for the current year audit as this is the first year the Company will
have an overdraft product on the balance sheet.

Our response All controls existing around the processes that drive the impairment provision are
to the risk heavily reliant on the completeness and accuracy of reports generated by the core
banking platform at the Bank. Due to these controls being implemented for part of the
year under audit, we are unable to place reliance on them for the full year. We have
therefore adopted a substantive testing audit approach.

We, along with our specialists, have reviewed the accounting policy documentation
and assessed whether management’s process to identify impairment is sufficiently
robust and compliant with the underlying accounting guidance (as prescribed in
International Accounting Standard 39).

We performed the following procedures during our audit:

Engaged our credit risk management specialists to review management’s approach

to calculating the impairment provision, to ensure it is in line with the International
Financial Reporting Standards (IFRS), through the adoption of IAS 39, and assess
the reasonableness of the key assumptions i.e., Probability of Default (PD) and Loss
Given Default (LGD) used to determine the impairment provision.

14
 Validated where possible the key PD and LGD inputs, in our work performed as noted
above.

Corroborated the conclusions reached by our specialists, by performing a review on

the portfolio in light of the observations noted by the specialists and verifying the
materiality of the observations on the year end provision.

Engaged our specialists to perform a sensitivity analysis on the following

assumptions, to establish a range of expected losses:

Non-marginal customers

LGD

Emergence Period

PD

Treatment of unauthorised overdrafts

Key Our validation of key inputs to the impairment calculation model revealed that data
observations flows to the underlying model were materially complete and accurate.
communicated
to the Audit The impairment model assumptions and methodology were found to be appropriate.
Committee
Our procedures around stress testing and sensitivity analysis of key inputs did not
reveal any material errors over the calculated provision.

Based on our work performed, we have concluded that the impairment provision in
respect of overdrafts is materially correct as at 28 February 2018.

Risk Improper revenue recognition (2018 £2,041k, 2017 £112k)

We reviewed the revenue streams earned by the Company, and assessed which of
these could give rise to a material error in the financial statements. We determined
that Interchange fees were a significant risk based on size and complexity around
recording transaction volumes which determine Interchange revenues.

This is a new risk for the current year’s audit as this is the first year the income has
become material.

Our response The key risk for us is the recording of Interchange fee in the incorrect period.
to the risk
As noted above, due to the controls not having operated for the full year of audit and
the resulting lack of maturity in the control environment, we adopted a substantive
testing audit approach which included increased sample sizes and substantiation
across the population to gain assurance.

To address the identified risk, we performed the following audit procedures:

Reviewed the Company’s accounting policy around revenue recognition.

15
 Vouched the Interchange fees earned on Prepaid Card transactions to third party
statements and obtained direct confirmation from the third party on the Interchange
fees payable to the Company for the year under audit.

Vouched the Interchange fees earned on current account transactions to third party
statements.

Vouched Interchange fees to cash.

Key We are satisfied that the Company has recorded revenue in line with its accounting
observations policy.
communicated
to the Audit Based on our work performed we can conclude that the Company has recorded and
Committee recognised Interchange revenue appropriately in the year under audit.

Risk Risk of management override

International Auditing Standards (UK & Ireland) mandate the consideration of

management override of internal controls as a fraud risk on all audits.

The susceptibility of an accounting estimate to management bias increases with the

subjectivity involved in making it. As part of our response to the risks of material
misstatement involving management (i.e., the risk of management override), we
review significant accounting estimates for evidence of management bias. We remain
alert to the possibility that management’s involvement in the preparation of the
financial statements, and its responsibility for the judgments and assumptions relating
to significant estimates, increases the risk of material misstatement due to fraud.

Our risk assessment incorporated specific consideration of significant transactions

and estimates, including:

Judgements applied by management in the valuation of share based payments;

Judgements applied in the calculation of the R&D tax credit claim; and

An assessment for evidence of fraudulent activity in journals posted throughout the

year.

Our response As previously noted, due to the controls not having operated for the full year of audit
to the risk and the resulting lack of maturity in the control environment, we adopted a substantive
testing audit approach which included increased sample sizes and substantiation
across the population to gain assurance.

In each area where we identified an associated risk of management override, we

performed the following audit procedures:

Share based payments

Agreed the completeness of share based payments to underlying employee

contracts;

Engaged our specialists to:

Test the completeness of the parameters in the call option pricing model.

Review the appropriateness of existing valuation model.

16
 Test the reasonableness of the risk free rate and volatility parameters as these
are two parameters which are outside of the model market trends.

Recalculate the FV for all new options granted during the year under audit.

Review the financial statement disclosures.

R&D tax credit claim

Engaged with our specialists to:

Discuss with management the basis of their R&D tax credit claim for both 2017
and 2018 year ends (both periods). Management informed us that they had
engaged with their tax specialists to advise them on the R&D tax credit claim.

Obtain management’s R&D tax credit calculation for both periods.

Obtain and reviewed the report from management’s tax specialists on the R&D
tax credit claim for both periods.

Review HMRC correspondence with the Bank and discuss with management the
basis of discussions that they had with HMRC.

Review management’s responses to HMRC’s enquiries.

Assess the inputs to the R&D tax credit calculation and challenge any which are
subjective or at risk of challenge from HMRC.

Review the provision management had recorded against the tax claim as a result
of ongoing HMRC enquiries.

Agreed the expenses included in the R&D tax credit claim to the income
statements; and

Reviewed the tax disclosures in the financial statements to the underlying

calculations.

Journals with higher risk characteristics

As a standard procedure in response to the risk of management override we completed

our journal entry testing for the year under audit. This testing focused on significant or
unusual journals, focusing on significant risk areas, journals posted around key
estimates and any topside adjustments using data analytics.

Key Share based payments

observations
communicated Based on our work performed, we have concluded that the Bank has appropriately
to the Audit valued the share based payments as at the year end date, using the Black Scholes
Committee option pricing model.

R&D tax credit claim

Our specialists performed an analysis to establish a reasonable range of estimates

resulting in a provision which we believe is reasonable. The range was determined
based on our understanding of the management’s claim, our review of their responses
to HMRC queries, and our industry knowledge. We reviewed management’s claim
within this range.

17
 Based on this work performed and our assessment of the provision that management
has recorded, we believe that the amount of the provision recorded against their claim
is reasonable at the year end.

Journals with higher risk characteristics

We did not identify any unusual journals from the testing performed.

Risk Incomplete and / or inaccurate transfer of assets from third party systems to the core
banking system at the Company (2018 £26.4m, 2017 £0)

During the year, the Company migrated the majority of its existing prepaid card
customers, previously maintained by a third party (the Prepaid Third Party), to its in-
house core banking system. There is a risk of inaccurate or incomplete transfer of key
customer data during the migration process, which took place in phases.

Our response To address the identified risk, we performed the following audit procedures:
to the risk
Reconciled the net transactional movement on the banking ledger to third party
settlement statements for a sample of days, in order to determine the completeness
of customer data on the Prepaid Third Party systems pre-migration.

Traced the balances migrated from the Prepaid Third Party to cash amounts
transferred by the Prepaid Third Party in relation to the previous pre-paid card
customers now transferred to current accounts.

Obtained confirmation of amounts owed by the Prepaid Third Party in respect of

customers who had been transferred but where cash had not yet been received in
relation to the transfers.

Obtained post migration reports from the Prepaid Third Party to ensure the
discontinuation of pre-paid card customer activity post-migration.

Reviewed management’s reconciliation, as at 30 April 2018, of the remaining net

settlement due from the Prepaid Third Party to confirm that there was no expected
liability for Monzo to extinguish with the Prepaid Third Party as a result of the
termination of the pre-paid card program post year end.

Circulated confirmations to a random sample of individual customers, to confirm the

accuracy of balance(s) held by them with the Company as per their records. Where
we did not receive a response on our confirmation request, we performed
alternative procedures by verifying accuracy of the customer balance as per the
Company’s systems and the statements communicated by the Company to their
customers.

Key The balances recorded in the financial statements as receivable due from the Prepaid
observations Third Party as at the year end in respect of migrated account balances are complete
communicated and accurate.
to the Audit
Committee We note from our review of post migration activity reports from, and communication
with, the Prepaid Third Party that migrated customer balances are no longer managed
by the Prepaid Third Party.

18
 Our confirmation procedures, and alternative procedures for non-responses, provided
assurance over the accuracy of migrated customer balances, with no exceptions
noted.

Based on our work performed, the Company has migrated customer balances
completely and accurately from the Prepaid Third Party to its core Banking system.

An overview of the scope of our audit

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality
determine our audit scope for the Company. This enables us to form an opinion on the financial statements.
We take into account size, risk profile, the organisation of the Company and effectiveness of controls,
including controls and changes in the business environment when assessing the level of work to be
performed. All audit work was performed directly by the audit engagement team.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.

We determined materiality for the Company to be £600k (2017 £132k), which is 1% of equity (2017 2% of
admin expenses). We believe that equity provides us the appropriate magnitude on which an omission or
misstatement that, individually or in the aggregate, in light of the surrounding circumstances, would
reasonably be expected to influence the economic decisions of the users of the financial statements. The
change from administrative expenses compared to prior year is due to the progress made by the Company
and thereby changes in the focus of the users of financial statement.

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality.

On the basis of our risk assessments, together with our assessment of the Company’s overall control
environment, we have set performance materiality at 50% (2017 50%) of our planning materiality, equating to
£300k (2017 £66k). The ongoing development of new products and internal processes has also contributed
to our assessment of setting performance materiality at this level.

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We have reported to the directors all uncorrected audit differences in excess of £30k (2017 £6k), which is
set at 5% (2017 5%) of planning materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed
above and in light of other relevant qualitative considerations in forming our opinion.

19
Other information

The other information comprises the information included in the annual report set out on pages 1 to 12, other
than the financial statements and our auditor’s report thereon. The directors are responsible for the other
information.

Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and

the strategic report and directors’ report have been prepared in accordance with applicable legal
requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:

adequate accounting records have not been kept; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 12, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.

20
Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.

Explanation as to what extent the audit was considered capable of detecting

irregularities, including fraud

The objectives of our audit:

in respect to fraud, are; to identify and assess the risks of material misstatement of the financial
statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatement due to fraud, through designing and implementing appropriate responses; and to
respond appropriately to fraud or suspected fraud identified during the audit. However, the primary
responsibility for the prevention and detection of fraud rests with both those charged with governance of
the entity and management; and

in respect to irregularities, considered to be non-compliance with laws and regulations, are to obtain
sufficient appropriate audit evidence regarding compliance with the provisions of those laws and
regulations generally recognized to have a direct effect on the determination of material amounts and
disclosures in the financial statements (‘direct laws and regulations’), and perform other audit procedures
to help identify instances of non-compliance with other laws and regulations that may have a material
effect on the financial statements. We are not responsible for preventing non-compliance with laws and
regulations and our audit procedures cannot be expected to detect non-compliance with all laws and
regulations

Our approach in summary was as follows:

We obtained a general understanding of the legal and regulatory frameworks that are applicable to the
Company and determined that the direct laws and regulations related to elements of company law and tax
legislation, and the financial reporting framework. Our considerations of other laws and regulations that
may have a material effect on the financial statements included permissions and supervisory requirements
of the Prudential Regulation Authority (‘PRA’) and the Financial Conduct Authority (‘FCA’).

We obtained a general understanding of how the Company complies with these legal and regulatory
frameworks by making enquiries of management, internal audit, and those responsible for legal and
compliance matters. We also reviewed correspondence between the Company and UK regulatory bodies;
reviewed minutes of the Board and Risk Committee; and gained an understanding of the Company’s
approach to governance, demonstrated by the Board’s approval of the Company’s governance framework
and internal control processes.

For direct laws and regulations, we considered the extent of compliance with those laws and regulations
as part of our procedures on the related financial statement items.

For both direct and other laws and regulations, our procedures involved: making enquiry of those charged
with governance and senior management for their awareness of any non-compliance of laws or
regulations, inquiring about the policies that have been established to prevent non-compliance with laws
and regulations by officers and employees, inquiring about the Company’s methods of enforcing and
monitoring compliance with such policies, and inspecting significant correspondence with the FCA and
PRA.

21
 We understood the activities of the Company to primarily include deposit taking, with overdrafts as the
main product offering. The Company received its full banking license in April 2017.

We assessed the susceptibility of the Company’s financial statements to material misstatement, including
how fraud might occur by inappropriate recognition of revenue and management override of controls.

We continued to identify weaknesses in the Company’s control environment in excess of what would be
considered normal in the banking industry. This limited the opportunities that we had to place audit
reliance on the design, implementation and operating effectiveness of the key controls that management
relies on for the proper functioning of the Company’s systems and processes. This is because the control
environment is not mature and is currently under development. This substantially increases operational
risk, and required us to identify and test any compensating manual controls and undertake further
additional substantive testing in most areas of the Company’s operations.

The Company operates in the banking industry which is a highly regulated environment. As such the
Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure that
the team had the appropriate competence and capabilities, which included the use of specialists where
appropriate.

A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.

Javier Faiz (Senior statutory auditor) for and on behalf of Ernst & Young LLP,
Statutory Auditor
London
27 June 2018

Notes:

1. The maintenance and integrity of the Monzo Bank Limited web site is the responsibility of the directors;
the work carried out by the auditors does not involve consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may have occurred to the financial statements since
they were initially presented on the web site.

2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.

22
Statement of comprehensive income
for the year ended 28 February 2018

Notes Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Interest income 150 -

Fee and commission income 2,201 112

Fee and commission expense (834) -

Net fee and commission income 6 1,367 112

Other operating income 309 8

Credit impairment charges 7 (12) -

Net operating income 1,814 120

Personnel expenses 8 (9,214) (2,529)

Depreciation and Amortisation expense 16,17 (250) (41)

Other operating expenses 11 (25,426) (5,477)

Total operating expense (34,890) (8,047)

Loss before tax (33,076) (7,927)

Taxation 12 2,530 1,238

Loss after tax (30,546) (6,689)

Total comprehensive loss (30,546) (6,689)

The results for the current and prior year are derived entirely from continuing operations.

The notes 1 to 28 form an integral part of these financial statements.

23
Statement of financial position
for the year ended 28 February 2018

Notes 28 February 2018 28 February 2017

£'000 £'000
Assets
Cash and balances at bank 13 96,943 14,874

Loans and advances to customers 14 160 -

Other assets 15 41,880 4,402

Property, plant and equipment 16 823 178

Intangible assets 17 14 24

Total assets 139,820 19,478

Liabilities
Customer deposits 18 71,276 -

Other liabilities 19 12,365 1,080

Total liabilities 83,641 1,080

Equity
Called up share capital 20 - -

Share premium account 93,989 26,298

Other reserves 871 235

Accumulated losses (38,681) (8,135)

Total equity 56,179 18,398

Total liabilities and equity 139,820 19,478

The notes 1 to 28 form an integral part of these financial statements. The financial statements on pages 23
to 48 were approved and authorised for issuance by the Board on 27 June 2018 and signed on its behalf by:

Tom Blomfield
Director

24
Statement of changes in equity
for the year ended 28 February 2018

Share Share Other Retained Total

capital premium reserves losses equity
£'000 £'000 £'000 £'000 £'000

Balance as at 1 March 2016 - 2,000 14 (1,446) 568

Shares issued - 24,288 - - 24,288

Cost of issuance - (63) - - (63)

Share based payments reserve - - 294 - 294

Exercise of options - 73 (73) - -

Losses for the year - - - (6,689) (6,689)

Balance as at 28 February 2017 - 26,298 235 (8,135) 18,398

Shares issued - 67,849 - - 67,849

Cost of issuance - (437) - - (437)

Share based payments reserve - - 915 - 915

Exercise of options - 279 (279) - -

Losses for the year - - - (30,546) (30,546)

Balance as at 28 February 2018 - 93,989 871 (38,681) 56,179

The share capital as at 28 February 2018 was £11 (2017 £7) which is shown as £nil (rounded to £’000) in the
above table. See Note 20 for further detail.

25
Statement of cash flows
for the year ended 28 February 2018

Notes Year ended Year ended

28 February 28 February 2017
2018
£'000 £'000

Cash flows from operating activities

Loss for the year (30,546) (6,689)
Adjustments for non-cash items:

Depreciation of property plant and equipment 241 36

Amortisation of intangible assets 10 5
Share based payments 916 294
Provisions 12 -
Changes in operating assets and liabilities:

Net increase in loans and advances to customers (160) -

Net increase in customer deposits 71,276 -
Increase in other assets 15 (37,477) (4,082)
Increase in other liabilities 19 11,285 904
Net cash used in operating activities 15,557 (9,532)

Cash flows from investing activities

Acquisition of property, plant and equipment 16 (886) (201)

Acquisition of intangible assets 17 - (29)
Net cash from investing activities (886) (230)

Cash flows from financing activities

Net proceeds from issuance of ordinary shares 67,398 24,225

Net cash from financing activities 67,398 24,225

Net increase in cash and cash equivalents 82,069 14,463

Cash and cash equivalents at beginning of year 14,874 411

Cash and cash equivalents at end of year

13 96,943 14,874

26
Notes to the financial statements
for the year ended 28 February 2018

1. Reporting entity

Monzo Bank Limited is a private limited Company incorporated and registered in England and Wales.
Individual financial statements have been presented for the Company.

2. Basis of preparation

The financial statements have been prepared on an historical cost basis in accordance with International
Financial Reporting Standards (‘IFRSs’) as adopted by the European Union and Companies Act 2006.

The financial statements are presented in Sterling (£’000 or £k), which is also the Company’s functional
currency.

The amounts expected to be recovered or settled for assets and liabilities in the financial statements are
due no more than 12 months after the reporting period unless specifically stated.

3. New accounting standards

As at the date of these financial statements, certain standards were in issue and effective for periods
beginning on or after 1 January 2018, and have not been early adopted for the year ended 28 February
2018. These standards have been adopted from 1 March 2018.

IFRS 9 Financial instruments

IFRS 9 will replace IAS 39 for annual periods on or after 1 January 2018. In preparation for the adoption of
IFRS 9 from 1 March 2018 for the financial year ending 28 February 2019, the Company established an IFRS
9 governance framework and programme for implementation in compliance with the standard and
regulatory guidance. The programme involved multiple functions across the Company and external
consultants with a steering committee established providing oversight. The key responsibilities of the
programme included defining IFRS 9 methodology specifically in respect of credit loss provisioning,
identifying data requirements, development of expected loss models, and establishing an appropriate
operating model and governance framework.

From a classification and measurement perspective, the new standard will require all financial assets,
except equity instruments and derivatives, to be assessed based on a combination of the entity’s
business model for managing the assets and the instruments’ contractual cash flow characteristics. The
accounting for financial liabilities will largely be the same as the requirements of IAS 39, except for the
treatment of gains or losses arising from an entity’s own credit risk relating to liabilities designated at fair
value through profit and loss (FVPL).

The adoption of IFRS 9 for the financial year beginning 1 March 2018 has not resulted in a significant
change to the current financial asset and liability classification, with cash and balances at bank, loans and
receivables and customer deposits, continuing to be measured at amortised cost under IFRS 9.

There has been a change in measurement bases specifically in regards to a change of basis of
provisioning to a view of expected loss for financial assets such as overdrafts for Monzo. This change has
not had a material impact in comparison to the provisions recorded under IAS 39. Further details are
provided in Note 25.

The expected loss on other financial instruments such as cash and other assets is not considered material
and as such has not been calculated.

27
 IFRS 15 Revenue from contracts with customers

The Company has reviewed the requirements of the new standard and there has been no significant
impact.

As at the date of these financial statements, certain standards were in issue but not yet effective and have
not been applied.

IFRS 16 Leases (effective date for periods beginning on or after 1 January 2019)

This standard will result in lessees recognising both a right of use asset and a lease liability on the balance
sheet under a single lease model removing the distinction between finance and operating leases.

A detailed analysis of the impact on the Company has not yet been performed though it is likely that on
adoption there will be an increase in both assets and liabilities.

4. Critical accounting estimates, judgments and assumptions

The preparation of the financial statements requires the use of accounting estimates and assumptions.
Estimates and judgements are continually evaluated based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. In the
future, actual experience may differ from these estimates and assumptions.

Management considers that the accounting estimates relating to fair valuing stock based compensation
(Note 10), going concern (see Director’s report), the recognition of a research and development (R&D)
credit (Note 15) and the recognition (or not) of deferred tax assets for carried forward tax losses (Note 12)
as the most material to the financial statements.

5. Summary of significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial
statements to the extent they have not already been disclosed in the other notes above.

a. Interest income

Interest income is recognised in the income statement for all instruments measured at amortised cost
using the effective interest rate method to the extent that it is probable that the economic benefits will
flow to the Company and can be reliably measured. Included within interest income is the interest
earned on the Company’s overnight deposits with Bank of England based on the bank rates.

b. Fee and commission income/expense

Fees and commission income is recognised in the income statement as services are provided to the
extent that it is probable that the economic benefits will flow to the Company and can be reliably
measured.

Fees and commission expense is recognised in the income statement as services are received.

c. Financial assets and liabilities

The Bank applies IAS 39 to the recognition, classification and measurement, and derecognition of
financial assets and liabilities.

There are no financial assets held as available-for-sale, or held-to-maturity and there are no financial
assets and liabilities held at fair value through profit and loss.

28
 i. Loans and advances to customers

Loans and advances to customers consist of overdrafts and overdrawn balances (unarranged
overdrafts) are classified as ‘loans and receivables’. These are initially measured at fair value and
subsequently measured at amortised cost less provision for impairment. The daily fee charged on
overdrafts doesn’t contain an interest element so no effective interest rate method has been applied.
The fee charged on overdrafts is recognised within fee and commission income.

See Note 25 for more details in respect to the provisions held for loans and advances to customers.

ii. Customer deposits

Customer deposit liabilities are recognised initially at fair value and are subsequently measured at
amortised cost.

iii. Other assets

Receivables are recognised initially at fair value and subsequently measured at amortised cost.

iv. Other liabilities

These amounts represent liabilities for goods and services provided to Monzo before the end of the
financial period which are unpaid. The amounts are unsecured and usually paid within 30 days of
recognition. Other liabilities are presented as current liabilities. They are recognised initially at fair
value and subsequently measured at amortised cost.

d. Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation and
impairment. Historical cost includes expenditure that is directly attributable to the cost of the assets.

Depreciation is provided on all property, plant and equipment, and calculated using the straight-line
method to allocate their cost, net of residual values, over their estimated useful lives, as follows:

Office and IT Equipment – 3 years

Fixtures and fittings – 3.5 years

Fixtures and fittings include office fit out costs and legal costs of acquiring the office lease are
recognised on a straight-line basis over the life of the lease.

e. Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses.
Externally acquired software and licenses are capitalised and amortised on a straight line basis over the
length of the license (between 1 and 10 years).

f. Impairment of non-financial assets

The Bank assesses at each reporting date whether there are any indicators of impairment. If any
indicators exist, the Bank estimates the asset’s recoverable amount. The recoverable amount of an
asset is the higher of its fair value less costs to sell and its value in use. If the carrying amount of the
asset exceeds its recoverable amount, the asset is considered impaired, and is written down to its
recoverable amount.

29
g. Current Taxation

Current income tax assets and liabilities for the current period are measured at the amount expected to
be recovered from or paid to the taxation authorities and involve a degree of estimation and judgement.
The tax rates and tax laws used to compute the amounts are those that are enacted or substantively
enacted, at the reporting date, when the Company generates taxable income. Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.

Tax assets and liabilities relating to open and judgemental matters, including those in relation to the
R&D reclaim are based on the Bank’s assessment of the most likely outcome based on information
available and probability of potential challenge. The Bank engages constructively and transparently with
the tax authorities with a view to resolution of any uncertain tax matters.

h. Deferred tax

Deferred tax is recognised on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and
are expected to apply with the related deferred income tax asset is realised or the deferred income tax
liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable
profits will be available against which the temporary differences can be utilised. No deferred tax assets
have been recognised as at 28 February 2018.

i. Leases

The Company applies IAS 17 Leases to its operating lease of office premises. As a lessee, rentals
payable under operating leases are expensed to the income statement on a straight line basis over the
period of the lease including any rent free periods.

j. Share-based payments

Employees (including senior executives) may be entitled to receive remuneration in the form of share
options, as a reward for performing well and to incentivise them to make Monzo a success.

The share options issued are equity settled with no cash settlement options. Service vesting conditions
apply; options vest evenly over fours years with a one year cliff where if an employee is a leaver within
the first year of employment, all vested options at that date are forfeited. There are no non-market
vesting conditions.

The cost of the employee services received in respect of the share options granted is recognised over
the period that employees provide services. This is generally the period in which the award is granted
or notified and the vesting date. The overall cost of the award is calculated using the number of shares
and options expected to vest and the fair value of the options at the date of grant.

The fair value of options at the grant date is recognised as an employee expense with a corresponding
increase in other reserves within equity over the period that the employees become unconditionally
entitled to the awards. The grant date fair value is determined using valuation models which take into
account the terms and conditions attached to the awards. Inputs into the valuation model include the
risk free rate and the expected volatility of the Company’s share price (see Note 20).

30
 k. Pensions

The Company participates in a single defined contribution pension scheme. The contribution payable to
a defined contribution plan is in proportion to the services rendered to the Company by the employees
and is recorded as an expense under personnel expenses. Unpaid contributions are recorded as a
liability.

The Bank does not operate a defined benefit pension plan.

l. Foreign exchange

The Bank’s financial statements are presented in GBP, which is the Bank's functional currency. That is
the currency of the primary economic environment in which the Bank operates. Transactions in foreign
currencies are initially recorded at the functional currency rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency spot rate of exchange ruling at the reporting date. All differences are taken to the Statement of
Comprehensive Income. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the initial transactions. Non-
monetary items measured at fair value in a foreign currency are translated using the exchange rates at
the date when the fair value is determined.

6. Net fees and commission

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Fees and commission income

Fee income on banking services 160 -

Interchange fee income 2,041 112

Fees and commission expense

Fee expense on banking services (834) -

Net fees and commission 1,367 112

The reported fees and commissions are those which do not contain an interest element and do not form
part of any effective interest rate calculations.

7. Credit impairment charges and other provisions

Year ended Year ended

28 February 28 February
2018 2017
£'000 £'000

Credit impairment charge on overdrafts and overdrawn 12 -

balances

Credit impairment charges 12 -

See Note 25 for further information on the impairment charge in respect of overdrafts and overdrawn
balances.
31
8. Personnel Expenses

Employee benefit expenses (including Directors) comprise:

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Salaries 7,167 1,995

Social security contributions 860 239

Contributions to defined contribution plans 194 -

Share based payments 916 295

Other personnel expenses 77 -

9,214 2,529

The average number of employees of the Company during the period was 183 (2017 47). All were employed
in management, operations and administration roles.

The increase in staff costs to £9.2m (2017 £2.5m) reflects the additional employees required to support
the operational running of the Company.

9. Director’s remunerations

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Total Directors’ emoluments

Wages and salaries 473 65

Share based payments 279 73

Contributions to defined contribution plans 2 -

754 138

Highest paid Director

Wages and salaries 139 60

Share based payments 166 -

305 60

As at 28 February 2018 there were no loans outstanding to directors (2017 £nil) and there were no loans
made to directors during the period (2017 £nil).

32
10. Share-based payments

The Company operates two share options schemes for the benefit of certain members of staff. The first is
an HMRC approved Company Share Option scheme (‘CSOP’), where awards can be made to employees
subject to conditions. The strike price for these options is set according to the fair market share price at
the time of issue as agreed with HMRC. The fair market share price was based on the pricing achieved in
the funding round immediately preceding the issuance given the shares are not actively traded. For the
Non-CSOP scheme, awards are made with the strike price set equal to the £0.0001.

The Company measures the cost of equity-settled options based on the fair value of the awards granted.
The fair value is determined based on an appropriate valuation model (Black Scholes) given the share
options are not actively traded. The use of an option valuation model to determine the fair value requires
the input of highly subjective assumptions including the expected price volatility, expected life of the
award and dividend yield. Changes in the subjective assumptions can materially affect the fair value
estimates.

The main assumptions that have been used in deriving the value of the options at grant are;

Risk free rate – 0.84%

Volatility – 35%

Dividend yield – nil

Expected life – 4 years

The fair value of options at grant date is recognised as an employee expense with a corresponding
increase in other reserves over the period that the employees become unconditionally entitled to the
awards. The total expense in the year ended 28 February 2018 was £916k (2017 £294k).

CSOP Non - CSOP

Number Number

Outstanding 18 February 2015 – –

Granted during the period 12,615 28,990

At 29 February 2016 12,615 28,990

Share split 1,261,500 2,899,000

Granted during the period 1,698,407 714,698

Lapsed (131,211) (43,820)

Exercised – (355,459)

At 28 February 2017 2,828,696 3,214,419

Granted during the period 2,601,094 1,752,032

Lapsed (216,599) (240,096)

Exercised (47,415) –

At 28 February 2018 5,165,776 4,726,355

The range of exercise prices for the CSOP share options is £0.1997 - £2.35. The range of exercise prices
for the non-CSOP share options is £0.0001. The weighted average remaining life of the CSOP and non-
CSOP share options is 2.73 years.

33
11. Operating expenses

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Prepaid card scheme operating costs 14,308 2,712

IT costs 1,815 917

Premises and office costs 952 233

Marketing 390 376

Legal and professional fees 857 629

Accountancy and audit fees 450 277

Current account operating costs 5,953 -

Administrative expenses 701 333

25,426 5,477

Auditors' remuneration for the audit of the financial statements was £91k (2017 £30k). There was no
remuneration payable to the auditors in respect of non-audit services in the year (2017 £nil).

34
12. Taxation

Current tax

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

UK corporation tax credit on loss for the period 2,530 1,238

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Loss on ordinary activities before tax (33,075) (7,927)

Standard rate of corporation tax 19% 20%

Expected tax credit 6,312 1,585

Effects of:

Expenses not deductible for tax 7 (27)

Additional deduction for R&D expenditure 1,882 966

Impact of surrendering losses at lower rate (800) (470)

Loss in year where no deferred tax asset recognised (4,871) (816)

Total UK corporate tax credit for the period 2,530 1,238

Deferred tax

The deferred tax included in the balance sheet is as follows:

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Included in debtors - -

- -

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Accelerated capital allowances (1) (25)

Losses 1 25

- -

A deferred tax asset has not been recognised in respect of tax losses carried forward totalling £29.6m
(2017 £5m) as there is insufficient evidence as to their recoverability.

35
 Factors affecting future tax charge

The UK Government has announced reductions in UK corporation tax to 17% by 1 April 2020. The closing
deferred tax assets and liabilities have been calculated taking into account that existing temporary
differences may unwind in periods subject to the reduced rates.

13. Cash and balances at bank

The balance consists of balances held at bank, mainly on overnight deposit with the Bank of England,
amounting to £96.9m at 28 February 2018 (2017 £14.9m). The balance held at Bank of England includes a
cash collateral account as part of the Bank being a direct settling participant of the Faster Payments scheme.

14. Loans and advances to customers

Loans and advances to customers consist of approved overdrafts provided to customers of £112.4k (2017
£nil) and overdrawn balances on current accounts of £47.6k (2017 £nil), net of impairment. See Note 25
for further information on the impairment charge in respect of overdrafts and overdrawn balances.

15. Other assets

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Prepayments 2,016 348

Collateral provided to payment scheme providers 13,532 2,461

R&D tax reclaim 3,768 1,238

Accrued income 1,568 -

Deposit on premises 143 171

Receivable in respect of prepaid card program 11,288 -

Other receivables 9,566 184

41,881 4,402

Included within other assets are £36m of financial assets and £5.9m of non financial assets. The credit
quality of the financial assets is considered low risk.

The recognised R&D reclaim amount is considered a non financial asset and is based on a best estimate of
the eligible costs. During the year management recognised an uncertain tax provision of £2.5m in relation
to ongoing enquiries from HMRC into the R&D reclaim for the 2017 year end. Due to the uncertainty
associated with the nature of expenses allowable for reclaim in such tax matters, the final outcome may
vary significantly.

36
16. Property, plant and equipment

Fixtures and Office and IT Total

fittings equipment
£'000 £'000 £'000

Cost:

As at 1 March 2016 - 19 19

Additions 1 200 201

Disposals - - -

As at 28 February 2017 1 219 220

Depreciation:

As at 1 March 2016 - 6 6

Charge for the period - 36 36

Depreciation on disposal - - -

As at 28 February 2017 - 42 42

Net book value as at 28 February 2017 1 177 178

Cost:

As at 1 March 2017 1 219 220

Additions 174 712 886

Disposals - - -

As at 28 February 2018 175 931 1106

Depreciation:

As at 1 March 2017 - 42 42

Charge for the period 47 194 241

Depreciation on disposal - - -

As at 28 February 2018 47 236 283

Net book value as at 28 February 2018 128 695 823

37
17. Intangible assets

Software licenses
£'000

Cost
As at 1 March 2016 -

Additions 29

As at 29 February 2017 29

Amortisation:

As at 1 March 2016 -

Charge for the period 5

Amortisation on disposal -

As at 28 February 2017 5

Net book value as at 28 February 2017 24

Cost
As at 1 March 2017 29

Additions -

As at 28 February 2018 29

Amortisation:

As at 1 March 2017 5

Charge for the period 10

Amortisation on disposal -

As at 28 February 2018 15

Net book value as at 28 February 2018 14

38
18. Customer deposits

The Company started taking customer deposits during the year with £71.3m received by financial year end
which is held on demand.

19. Other liabilities

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Accruals 3,910 748

Accounts payable and other creditors 7,407 229

Other taxes and social security costs 431 103

Deferred income 617 -

12,365 1,080

Included within other liabilities are £6m of financial liabilities and £6.3m of non financial liabilities.

20. Called up share capital

Year ended Year ended

28 February 2018 28 February 2017
£ £

Ordinary shares of £000000.1 each 11 7

11 7

Number of Number of Share

Nominal ord shares deferred Capital

shares £

As at 1 March 2016 0.00001 400,515 50,231 5

Shares split 0.0000001 39,650,985 4,972,869 -

40,051,500 5,023,100 5

Shares issued 0.0000001 11,676,610 - 1

Conversion to deferred shares (13,125) 13,125 -

Cancellation of deferred shares - (5,036,225) (1)

Options exercised 0.0000001 355,459 - -

Shares issued 0.0000001 19,626,106 - 2

As at 28 February 2017 71,696,550 - 7

Shares issued 0.0000001 33,655,679 - 4

Options exercised 0.0000001 47,415 - -

As at 28 February 2018 105,399,644 - 11

39
 All Ordinary shares have the same full voting rights attached.

Some of the shares in issue are owned by the board, management and staff and are subject to time based
vesting conditions. At the balance sheet date 3,142,018 (2017 10,636,554) shares were unvested. In the
event of shares failing to vest the Company has the right to repurchase the shares at their nominal value.

21. Related party transactions and controlling parties

Controlling parties

In the opinion of the Directors there is no overall controlling party.

Transactions with key management personnel

Key management personnel are defined as those persons having authority and responsibility for planning,
directing and controlling the activities of the Company excluding any Directors, for whom amounts have
been separately disclosed in Note 9.

The compensation paid or payable to key management personnel is shown in the tables below:

Year ended Year ended

28 February 2018 28 February 2017
£'000 £'000

Salaries & remuneration 433 177

Social security contributions 47 22

Share based payments 217 118

Contributions to defined contribution plans 12 -

709 317

As at 28 February 2018, there were no loans or any other amounts outstanding with any key management
personnel (2017 £nil).

Transactions with related parties

Transactions under ordinary course of business entered into by the Bank with related parties (associate
entity of a shareholder)in the current year included £1.1m of fees charged to the profit and loss during the
year and £6.7m(2017 £nil) receivable on the balance sheet as at 28 February 2018.

22. Contingent liabilities and commitments

Contingent liabilities

There are no significant contingent liabilities as at 28 February 2018 (2017 none).

Loan commitments

Total committed but undrawn facilities as at 28 February 2018 are £723k (2017: £nil) in respect of overdraft
agreements. These commitments represent agreements to lend in the future subject to the terms and
conditions of the agreement as such the amount and timings of future cash flows are uncertain.

40
 Operating lease commitments

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as
follows:

28 February 2018 28 February 2017

£'000 £'000

Within one year 651 127

Later than one year but not later than five years 879 1,175

Later than five years - -

Total 1,530 1,302

Post 28 February 2018, the Company has entered into a commitment to sign a lease agreement for
occupation of a new office space subject to certain conditions being met by the lessor. The annual rent of
the lease will be £1.3m per annum for a period of 2 years with a rent free period of 6 months.

23. Country reporting disclosure

In 2015, the UK Government enacted legislation (contained in the Financial Services and Markets Act
2000 Statutory Instrument 3118)) with respect to country reporting disclosure. As the Company only
operates in the UK this requirement has been considered and no further disclosure is required.

41
24. Financial assets and liabilities

The balances in the tables below relate to financial assets and liabilities only and do not agree directly
with the balances in the balance sheet which also include non financial assets and liabilities.

Financial assets and liabilities by measurement basis

Held at amortised Loans and Total

cost receivables
£'000 £'000 £'000

As at 28 February 2018

Financial assets

Cash and balances at bank - 96,943 96,943

Loans and advances to - 160 160

customers

Other assets - 35,953 35,953

Total financial assets - 133,056 133,056

Financial liabilities

Customer deposits 71,276 - 71,276

Other liabilities 6,044 - 6,044

Total financial assets 77,320 - 77,320

As at 28 February 2017

Financial assets

Cash and balances at bank - 14,874 14,874

Loans and advances to - - -

customers

Other assets - 2,461 2,461

Total financial assets - 17,335 17,335

Financial liabilities

Customer deposits - - -

Other liabilities - - -

Total financial assets - - -

Fair value of financial assets and liabilities

The carrying value of the financial assets and liabilities as outlined in the table above approximates to fair
value and are categorised as level 2 within the fair value hierarchy.

42
Contractual maturity of financial assets and liabilities

On <3 Between 3 Over Total

demand months months and 6 one
months year
£'000 £'000 £'000 £'000 £'000

As at 28 February
2018

Financial assets

Cash and balances 96,943 - - - 96,943

at bank

Loans and advances 160 - - - 160

to customers

Other assets 1,568 23,922 709 9,755 35,953

Total financial 98,671 23,922 709 9,755 133,056

assets

Financial liabilities

Customer deposits 71,276 - - - 71,276

Other liabilities - 6,044 - - 6,044

Total financial 71,276 6,044 - - 77,320

liabilities

Net asset position 27,395 17,878 709 9,755 55,736

As at 28 February
2017

Financial assets

Cash and balances 14,874 - - - 14,874

at bank

Loans and advances - - - - -

to customers

Other assets - - - 2,461 2,461

Total financial 14,874 - - 2,461 17,335

assets

Financial liabilities

Customer deposits - - - - -

Other liabilities - - - - -

Total financial - - - - -
liabilities

Net asset position 14,874 - - 2,461 14,875

43
25. Credit risk management

Credit risk is the risk of financial loss when customers or other counter parties fail to settle their
contractual obligations to the Bank.

The Bank has exposure to a limited number of financial services counter parties under the ordinary course
of business. The Bank manages and controls credit risk by setting limits on the amount of risk it’s willing
to accept for individual counter parties and monitoring exposures in relation to such limits.

The Bank also provides overdrafts to its customers which creates retail credit risk as customers may fail to
pay. The maximum exposure to retail credit risk includes the total committed overdrafts shown in Note 22
and overdrafts on the balance sheet as loans and advances.

The Bank uses lending criteria when assessing applications for overdrafts which are aligned to
Affordability principles (as outlined in the FCA’s Consumer Credit sourcebook) and the Bank’s risk
appetite. The general approval process uses application data provided by the customer when they take on
an overdraft and their credit history using information held by credit reference agencies. Customer
exposure is actively managed to make sure that lending exposure is within the Risk appetite at all times.
As a result, overdraft limits can be revised when applications are reassessed.

The main goal of the collections policy is to treat customers fairly. The Bank contacts each customer
individually to discuss their circumstances. Where a customer is identified as vulnerable or in financial
difficulty, the Bank offers a range of support, tools and assistance (or points them towards external
organisations that can give them extra support). This means the Bank can agree individual actions or
plans with each customer, which helps to bring customers facilities back into a sustainable position.

The principal committee at which the bank’s retail credit risk is scrutinised and managed is the Risk
Committee. In addition, the overall Risk appetite and lending criteria and policy is approved by the Board.

Impairment under IAS 39:

IAS 39 requires us to record impairment for an asset if we see objective evidence of impairment as a result
of one or more events (ie financial stress) that occurred after the initial recognition of the asset.

See Note 7 for the provisions taken on overdrafts and overdrawn balances under IAS 39.

Impairment under IFRS 9:

IFRS 9 requires recognition of expected credit losses based on forward-looking information and for the
Bank is applicable to overdrafts measured at amortised cost and overdraft commitments. IFRS 9 has been
adopted from 1st March 2019. Under IFRS 9 guidance, assets are required to be classified into the
following three stages:

1. Stage 1: For assets that have not had a significant increase in credit risk since initial recognition, 12-
month expected credit losses (ECL) are recognised and interest revenue is calculated on the gross
carrying amount of the asset.

2. Stage 2: For assets that have experienced a significant increase in credit risk since initial recognition
but that do not have objective evidence of impairment, lifetime ECL are recognised and interest income
is still calculated on the gross carrying amount of the asset.

3. Stage 3: For assets that have objective evidence of impairment at the reporting date, lifetime ECL are
recognised and interest income is calculated on the net carrying amount.

The Bank does not use the low credit risk exemption for overdrafts and does not measure expected credit
losses on a collective basis.

The expected loss on other financial assets such as cash and trade receivables is not considered material
considering the credit quality of the counter parties, and as such has not been calculated.

44
Overdraft credit risk management practices

The Bank considers an overdraft to have experienced a significant increase in credit risk when one or
more of the following quantitative, qualitative or backstop criteria have been met:

1. Quantitative criteria: The remaining Lifetime PD (see definition of Lifetime PD below) at the reporting
date has increased, compared to the residual Lifetime PD expected at the reporting date when the
exposure was first recognised, by a ratio equal to 1.8

2. Qualitative criteria: short-term forbearance; death; unemployment; bankruptcy; divorce; whenever this
information is available (i.e. the customer calls in to inform the bank they have lost their job)

3. Backstop: As defined in IFRS 9 where the customer is more than 30 days past due which is defined as
30 days after post overdraft repayment demand

At each reporting date, the Bank assesses whether financial assets carried at amortised cost are credit-
impaired. The definition of 'credit-impaired' is aligned with the Bank’s definition of default. The Bank
defines an overdraft as in default, which is fully aligned with the definition of credit-impaired, when it
meets one or more of the following criteria:

1. 90 days past due

2. Non-Credit forborne covers bankrupt, IVA, deceased and other charge-off reason

3. The overdraft has been renegotiated because the customer’s condition has deteriorated, unless there’s
evidence that the risk of not receiving contractual cash flows has reduced significantly and there are no
other indicators of impairment

The Bank writes off overdrafts against the related provisions when it has exhausted all practical recovery
efforts and has concluded there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include:

1. Customer indicates inability (cannot afford) to pay the outstanding balance over a reasonable period
through a renegotiated repayment plan

2. It is deemed that the customer does not show enough “willingness to pay”:

Not keeping promise to pay over a period of time

Defaulting in renegotiated repayment plan

Not contactable

The Bank may modify the terms of lending (currently overdrafts) provided to customers, to maximise
recovery and help customers make the repayments required. These restructuring activities include
extended payment term arrangements, payment holidays and payment forgiveness. Restructuring policies
and practices are based on indicators or criteria which, in the judgement of management, indicate that
payment will most likely continue. Monzo will restructure outstanding overdraft balances when it is
deemed the responsible way to help the customers pay the debt in a sustainable way. The risk of default of
such assets after modification is assessed at the reporting date and compared with the risk under the
original terms at initial recognition, when the modification is not substantial and so does not result in
derecognition of the original asset.

The Bank may write-off financial assets that are still subject to enforcement activity. The Bank still seeks
to recover amounts it is legally owed in full, but which have been partially written off due to no reasonable
expectation of full recovery. Subsequent recoveries of amounts previously written off decrease the
amount of impairment losses recorded in the statement of comprehensive income. Monzo had no assets
that were written off during the year ended 28 February 2018.

45
Model inputs and assumptions

The Expected Credit Loss (ECL) is measured on either a 12-month (12M) or Lifetime basis depending on
whether a significant increase in credit risk has occurred since initial recognition or whether an asset is
considered to be credit-impaired. The IFRS 9 model developed by the Bank requires a number of key
supporting policies and methodologies:

ECL is determined by projecting the probability of default (PD), loss given default (LGD) and exposure at
default (EAD) for each future month and for each individual exposure. These three components are
multiplied together and adjusted for the likelihood of survival (i.e. the exposure has not prepaid or
defaulted in an earlier month). This effectively calculates an ECL for each future month, which is
summed to obtain the total of ECL losses.

Lifetime period - The forecast period for amortising facilities is based on the remaining contractual
term. For revolving facilities, such as the overdraft product, the lifetime period is based on an analytical
approach rather than than contractual characteristics of the facility type.

PD represents the likelihood of a borrower defaulting on its financial obligation (as per "Definition of
default and credit-impaired"), either over the next 12 months (12M PD), or over the remaining lifetime
(Lifetime PD) of the obligation.

Lifetime PD is obtained by applying an appropriate default emergence curve to the current 12M PD
defined on the basis of the current risk score (based on external bureau data). The default emergence
curve defines the expected timing of defaults from the point of observation (reporting date) throughout
the lifetime of the loans. Default emergence curves depend on the risk band of the exposure to model
mean reversion effects. Due to the lack of historical data, default emergence curves have been initially
based on benchmark models and expert judgement.

EAD is based on the amounts Monzo expects to be owed at the time of default. EADs are determined
based on the expected payment profile, which varies by product type. For Overdraft, the exposure at
default is predicted by taking current drawn balance and adding a Credit Conversion Factor (CCF) that
allows for the expected drawdown of the remaining limit by the time of default. Due to the lack of
internal historical data, CCF has been defined using expert judgement and Basel regulatory values.

LGD represents Monzo’s expectation of the extent of loss on a defaulted exposure and is expressed as a
percentage loss per unit of EAD. LGDs have been set at product level due to the limited differentiation in
recoveries achieved across different borrowers. Due to the lack of internal historical data, LGD have
been defined using expert judgement and Basel regulatory floors.

Discounting - Monzo does not charge interest on overdrafts, as such ECL will not be discounted.

Risk Grade - The Bank allocates each exposure to a Credit Risk Grade based on its Credit Bureau score.
Each Credit Risk Grade is associated with a 12 months PD.

Forward-looking economic information is also included in determining the 12-month and lifetime PD
and LGD. The key factors included are net interest gearing and rate of change of unemployment. The
assessment of significant increase in credit risk (SICR) for stage allocation and the calculation of ECL
both incorporate forward-looking information. The Bank has performed historical analysis and identified
the key economic variables impacting PD and LGD. Given the lack of internal data, this analysis used as
a proxy unsecured lending time series of write off rates available from the Bank of England. These
economic variables and their associated impact on the PD and LGD (no impact assumed on EAD) have
been modelled. The different sensitivity to the economic cycle of the Bank’s customers versus the
sensitivity of the average UK unsecured lending customer has been taken into consideration.

Post Model Adjustments (PMA) - Model outputs should be adjusted to account for situations where data
is not available or where a change in policy is expected to have an impact on the model outputs that
cannot be embedded in the current model calculation. No material post model adjustments have been
included.

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 Model output

Based on the gross carrying value of the overdraft exposure as at 28 February 2018 of £120k, the ECL for
the portfolio under IFRS 9 is calculated to be £11k. The entire overdraft exposure as at 28 February 2018 is
classified as Stage 1.

26. Liquidity risk management

Liquidity risk is the risk that the Company could fail to meet its obligations as they fall due or can only do
so at exceptional cost. This includes having the right type and quantity of funds, in the right place, at the
right time and in the correct currency.

Liquidity risk is managed by the Treasury department and is also monitored by the second line Risk team.
Reporting and management of the liquidity risk is monitored by ALCO, which meets on a monthly basis.

The company currently holds its surplus assets in overnight deposits with Bank of England which are
accessible on demand to provide liquidity for the Bank.

The key metric used to monitor liquidity risk is the Liquidity Coverage Ratio (LCR). At year end and at all
times throughout the year, Monzo was significantly in excess of all liquidity targets.

27. Capital management

Capital risk is the risk that the Company has sub-optimal quantity or quality of capital resources to meet its
capital requirements and to absorb unexpected losses if they were to occur. Causes of inadequate capital
could include a high level of default on overdrafts already made by the Company, or having large
unexpected operational losses.

Capital is one of the Bank’s key measures and the Board approved capital risk appetite makes sure we’re
holding sufficient capital within regulatory requirements. The principal committee at which the bank’s
capital is scrutinised and managed is ALCO. The Executive Committee and Risk Committee review high
level capital metrics, together with more specific details if there are any concerns. The Board and Risk
Committees also receive high level metrics and commentary on capital risk and projections of capital
usage and surplus going forward.

Monzo refreshes its Internal Capital Adequacy Assessment Process (ICAAP) on an annual basis, which
includes a 3 year forecast of the Bank’s capital position. The ICAAP is used to inform the future capital
strategy and is submitted to the PRA following Board scrutiny and approval.

The ICAAP assesses the Company’s Pillar 1 requirements using the Standardised/ Basic Indicator
approaches (for respectively credit risk and operational risk capital) and determines additional Pillar 2A
capital to be held for those risks not captured or not fully captured by Pillar 1 capital. The Company also
holds Pillar 2B capital based upon wind-down costs and the regulatory determined capital conservation
buffer and counter-cyclical buffer.

A series of stress and scenario testing during a 3 year forecast is also undertaken to assess the resilience
of the capital position. In all cases, Monzo has shown that it is able to withstand the Board approved
stress scenarios, in some cases because management actions have been taken to mitigate the effect of
these stresses.

To avoid breaching a regulatory capital measure, a board approved Management Buffer of additional
capital is imposed above the regulatory threshold. Unlike the regulatory limits, the Management Buffer is
designed to be utilised in a controlled manner when required.

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 Key capital risk metrics

Monzo’s key capital metric is the current and projected surplus of capital resources over regulatory capital
requirements. The CET1 ratio is also monitored.

During the year ended 28 February 2018, the Bank complied in full with all its externally imposed capital
requirements.

28. Market risk management

The only form of market exposure faced during the year was foreign exchange risk. During the year, a
portion of the collateral held with payment scheme providers was held in USD and unhedged. This was
converted to GBP during the year which resulted in a one-off foreign exchange loss of £380k recognised
within operating expenses (refer to Note 11).

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